Updated ICC discussion paper on the adverse effects of discriminatory taxes on telecommunications services

Updated ICC discussion paper on the adverse effects of discriminatory taxes on telecommunications services

In this paper, ICC recommends that countries minimize the taxes imposed on telecommunications goods and services to support investment-driven increases in growth and employment.

Despite the current severe economic crisis and the urgent need to trigger private investment in the ICT sector, a number of countries apply taxes to telecommunications goods and services at higher levels than for other goods and services. These burdensome and discriminatory taxes deter the adoption and use of broadband, mobile and other advanced ICT sector tools that are major drivers of development and growth in the information-based, but currently crisis-shaken, economies of the 21st century.

The World Bank has found, based on an econometrics analysis of 120 countries, that each 10% increase in broadband penetration increases economic growth by 1.3% . Unfortunately, the tax treatment of telecommunications goods and services sometimes reflects the out-dated view that communications services should be taxed as luxuries affordable only by the rich – rather than as essential services for all, which they are today. Because telecommunications taxes often have the most stifling impact on the low income consumers who represent the greatest opportunity for achieving universal adoption of fixed or mobile broadband, these taxes are directly inconsistent with both Millennium Development Goals and the public policy of most countries that have implemented the taxes.

ICC recommends that countries minimize the taxes imposed on telecommunications goods and services to support investment-driven increases in growth and employment. Far from being luxuries, the tools from this sector bring the building blocks of opportunity to the global information-based economy. Increasingly, public policy is oriented towards connecting the unconnected in order to achieve 100% adoption of advance telecommunications services. Any taxes that have the effect of impeding that goal merit reconsideration. The following are further examples of the discriminatory taxes imposed on telecommunications goods and services in some countries. These all represent opportunities for ICC to work with national governments to avoid, minimize or repeal the identified tax.