Poor nations lose billions by taxing mobiles - study

CIOL Bureau
New Update

Lucas van Grinsven


AMSTERDAM: Developing countries could raise billions of dollars in additional revenues if they cut excessive luxury taxes on the purchase of mobile phones, a study found on Monday.

Some of the world's poorest countries impose special taxes which make mobile communications expensive and which hamper economic growth, according to the survey commissioned by the GSM Association, which groups the world's mobile telecoms carriers.

If such taxes were abolished, an additional 930 million units would be sold over the next five years -- bringing in an additional $45 billion in taxes from mobile services in the 50 countries surveyed, said Ben Soppitt, programme manager of emerging markets at the GSM Association.


"We're not saying governments should do this, but don't treat it like a luxury item, like a Rolls Royce," Soppitt said.

Close to 20 developing countries out of the 50 surveyed charge more than 20 cents of tax on every dollar spent on mobile communications, usually as a result of a special levy.

Turkey leads the pack, with a 44 percent tax burden, or an average $73 in taxes per subscriber per year, according to the study by Deloitte & Touche, Pyramid Research and Frontier Economics.


Syria, Zambia, Kenya, Argentina, Brazil, Ukraine and Peru also charge more than the average 20 percent.

Yet such taxes undermine efforts by telecoms carriers to expand their user base through very cheap mobile phones.

The GSM Association started a programme with U.S. phone maker Motorola this year to produce handsets for emerging markets for less than $40.


Eliminating all telecom specific taxes would boost the number of mobile users in the 19 affected markets by 34 million by 2010 and mobile voice traffic by 25 percent.

Equally a 10 percentage point rise in mobile phone users in a country increases the gross domestic product by 0.6 percent, the London Business School found.

Mobile phone networks are mostly in place, making it easy to hook up new subscribers.

"It is estimated that between 75 percent and 80 percent of the world's population live in areas already covered by mobile communications systems, yet only 25 percent use the services," said Hamadoun Toure, in charge of telecoms development at the International Telecommunication Union.