For the longest time, African Governments have seen the communications sector as the ‘golden goose’ for tax revenues. These taxes seemed to sprout up like weeds in every part of the value chain, whether it was social media or mobile money. For the growing population of ‘digital natives’, these financial burdens were the equivalent of a tax on life. Russell Southwood looks at whether the tide might be turning and why lowering taxes would be good for new economic growth.
On Tuesday the Democratic Republic of Congo removed the tax it had been levying on mobile device registry after a vigorous campaign in the country’s parliament.
The decision was taken last weekend by the Congolese government during the Council of Ministers on the adoption of the draft decree setting the calculation methods and the rates of service income of the regulatory authority for the telecommunications.
Officially launched in September 2020, this tax was supposed to optimize the security and quality of service of mobile networks in the country, to fight effectively against the counterfeiting of mobile devices by disconnecting devices identified as non-compliant and to combat the theft of mobile devices by blocking devices reported stolen. The abolition of this tax comes after multiple calls from parliament and civil society actors, who castigated the lack of "legal basis" and "traceability" in the management of the fees levied by this tax.
In July last year, Tanzania levied a tax on mobile money services. The tax, originally set to be 10 to 10,000 Tanzanian shillings (0.4ȼ US to $4.31) per transaction., Faced by protests during July and August, Tanzania’s President, Samia Suluhu Hassan, told the minister of finance and planning, Mwigulu Nchemba, and the minister of communications and information technologies, Faustine Ndugulile, to rethink the costs. Subsequently it was announced the tax would be cut by 30% to 7 to 7,000 shillings, depending on the amount of money transferred.
Nchemba’s ministry making the best of a strategic retreat said: "The government believes that the decision will bring relief to the people and allow them to raise funds to implement various development projects." In addition to the reduction in the amount of the tax, the government also obtained a 10% cut by mobile operators in their fees for money transfers.
Ghana already has a 5% tax on mobile telecommunications, and Appiah, a policy analyst and development consultant in Accra, worried that the new 1.75% levy on mobile money […]
