A4AI Decries Taxes on Internet Services, Applications

Alliance for Affordable Internet (A4AI), global internet advocacy group has frowned at the growing number of African governments that levy taxes on internet services and applications saying it is preventing millions of citizens from accessing the internet.

The organisation says its mobile broadband pricing update shows that Africans are charged the most to connect to the internet with 1GB of mobile data costing the average user approximately 9% of their monthly income.

Eleanor Sarpong, A4AI’s Deputy Director and Policy Lead says the continent cannot afford to keep these taxes in place.

“Africa, with the largest digital divide of any geographic region, has the greatest untapped potential with regards to improving affordable access and meaningful use of the internet. With affordable internet access, African economies can grow sustainably and inclusively.”

Sarpong makes specific mention of Uganda’s new Excise Duty (Amendment) Act 2018 which imposes a daily fee of UGX 200 (US$0.05) to access social media sites and many common internet-based messaging and voice applications, as well as a tax on mobile money transactions.

With this tax, the cost of 1GB of mobile data increased to nearly 40% of monthly income for the poorest in that country, she adds.

Sarpong cited several other examples, including the Zambian government’s announcement of plans to levy a 30 ngwee (3c) daily tax on social network use, the new requirement for bloggers in Tanzania to pay a government licence fee, Benin’s short-lived social media tax of 5 CFCA per megabyte – as well as Kenya’s upcoming Finance Bill which targets internet use for additional taxation.

She describes these taxes as short-sighted strategies with long-term consequences.

“While countries may garner additional tax revenue at the start, these taxes increase the cost to connect for all – particularly for those already struggling to afford a basic connection – and so defer on later economic advantages, further delaying the delivery of digital development opportunities.

An analysis of the Ugandan social media tax by Research ICT Solutions showed that it hit rural regions- where average incomes are lower – the hardest.”

“Increasing the cost to connect builds up the barriers to connectivity, and contributes to a growing digital divide. A4AI calls on countries looking to accelerate economic growth and build a resilient, inclusive economy to avoid this tax pay-off, and to reach for deeper digital dividends in the future.

“To do so, they would do well to focus on urgent policy actions to stimulate growth and investment that benefits all citizens.”

A4AI has also revealed that new data on affordability shows that Asia has the most affordable 1GB plans, with prices averaging around 1.54% of income. This is compared with 3.58% in Latin America and the Caribbean, and 8.76% in Africa.

“Because of continuous improvements, a large number of Asian countries (13 out of 17) now meet the ‘1 for 2’ target (1GB of mobile broadband data available for 2% or less of GNI per capita), while only four African countries (Tunisia, Nigeria, Mauritius, and Egypt) do so,” stated the organisation.