$71 bn Taxes Hinders Phone Access, Investment-GSMA

A report commissioned by GSMA, the umbrella body of GSM operators in the world found that "If all mobile specific-taxes in Sub-Saharan Africa had been removed in 2007, an additional 43 million people in the region would be connected by 2012 leading to an increase in overall tax receipts of $930 million between 2007 and 2012," the report added.

Gabriel Solomon, senior vice president at the GSMA, said mobile consumers in Africa are faced with some of the highest tax rates in the world which hit poorer members of society hardest. "These taxes are holding back mobile adoption in Africa, curbing economic growth and, ironically, are actually lowering the total revenues collected by governments," he said.

The research found that the mobile industry in Sub-Saharan Africa employs more than 3.5 million people directly or indirectly and, in 2006, contributed an average of four per cent to African countries' Gross Domestic Product (GDP). The GSMA announced in October that mobile operators plan to invest approximately $50 billion in sub-Saharan Africa over the next five years. The report estimates that every dollar the mobile industry invests in Africa generates an average of US80 cents in taxes.

It calculates that the mobile sector accounts for seven per cent of total government revenues in the region.

Mohsen A. Khalil, Global Information and Communication Technologies director at the World Bank said that taxation should be designed on the basis of short-term considerations as on the basis of achieving the best long-term economic interests for the society and in a way that accelerates the extension of services to the poor. "The indirect benefits to the economy of having affordable access to telecommunications services far outweigh any short-term benefit to the budget," he noted.