Cut tax on internet devices, Africa told

Internet users. Developing countries have been urged to reduce taxation on devices used to access the Internet if they hope to address the high data costs faced by some of the world’s poorest people. Research shows that in 13 African countries, taxes make up more than 20 per cent of the cost of acquiring a mobile phone. PHOTO/FILE 

In Summary

• Alliance for Affordable Internet notes that despite making access to cheap data a key policy objective, many developing economies are imposing levies in technology devices.
• Research shows that in 13 African countries, taxes make up more than 20 per cent of the cost of acquiring a mobile phone.
• Kenya's performance is, however, ranked higher than Nigeria, Uganda and Tanzania.
• In developed countries, the cost of broadband Internet is one or two per cent of monthly per capita income.
• Mauritius and Brazil round off the top three countries with the most affordable Internet.

By MUTHOKI MUMO
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Developing countries have been urged to reduce taxation on devices used to access the Internet if they hope to address the high data costs faced by some of the world’s poorest people.

In the 2013 Internet Affordability Index, the Alliance for Affordable Internet notes that despite making access to cheap data a key policy objective, many developing economies are imposing levies in technology devices.

“Despite a commitment to broadband access, many countries tax hardware required for broadband infrastructure and consumer devices such as PCs and mobile phones,” writes the Alliance.

Research shows that in 13 African countries, taxes make up more than 20 per cent of the cost of acquiring a mobile phone.

In its recommendations, the Alliance urges countries to “eliminate luxury taxation or excessive customs” on goods and services required to access the Internet.

The Index ranks 46 developing and emerging countries by the level of Internet affordability.

Kenya comes in position 18 trailing sub-Saharan counterparts such as South Africa in the 12th position and Botswana in position 16.

Kenya's performance is, however, ranked higher than Nigeria, Uganda and Tanzania.

Overall, Malaysia emerges top following a comprehensive policy reform in 2010 that saw the country pursue an ambitious broadband strategy.

Mauritius and Brazil round off the top three countries with the most affordable Internet.

Kenya recently reversed value-added tax (VAT) exemptions and zero-rating on technology goods, leading to an appreciation in prices of computers and mobile phones.

High speed internet

The report notes that for the two billion people living on less than $2 a day in the 46 surveyed nations, affordable high speed Internet remains out of reach.

In these countries, the entry-level price of broadband internet translates to about 40 per cent of monthly income.

United Nations targets would see these people access high speed Internet at a cost equivalent or less than five per cent of their monthly income.

In developed countries, the cost of broadband Internet is one or two per cent of monthly per capita income.

Apart from addressing tax regulation, the report notes that countries need to promote competition in the telecommunication sector.

Last-mile connections, which are typically not profitable for telecom firms, ought to be bridged through government subsidies and public private partnerships.