By Winnie Kamau
A new study examining the misconceptions, challenges and real-life impact of additional taxes on Over the Top Services (OTTs) imposed by governments across the African continent is out.
Released by Mozilla and The African Union Commission (AUC) at an event in Addis Ababa, it revealed that the Regulatory Treatment of OTTs in Africa often imposed without public consultation and without impact assessments – have increased barriers to access.
This has also pushed people offline, and limited access to information, and access to services. The study conducted made the analysis based on the available evidence and a select number of case studies.
“We’ve seen new taxable internet users during the last two years leave millions of people struggling to deal with the costs of getting and staying online,” said Alice Munyua, Mozilla Policy Advisor.
“These regressive regulatory measures are taking place as governments rush to introduce digital transformation initiatives, and instead of focusing on how to connect more people to the internet, the region is building barriers that keep them off it,” said Munyua .
The study examined the 2018 Ugandan government excise duties which included a mobile money tax of 1% on the transaction value of payments, transfers and mobile money withdrawal fee increasing from 10% to 15%.
A new levy on more than 60 online platforms, including Facebook, WhatsApp, and Twitter that amounted to 200 Ugandan Shillings ($0.05) per day.
The impact of these new taxes was immediate and saw the drastic decrease in the internet users in Uganda by nearly 30% between March and September 2018.
But the impact is far wider felt than just the number of lost internet users, an initial estimate in August 2018 was that Uganda had forgone 2.8% in economic growth and 400 billion Ugandan shillings in taxes. These types of sector-specific taxes pose a considerable threat to internet access and affordability for all users, but especially low income and marginalized people.
Internet costs in Uganda are already prohibitively high. Uganda’s gross domestic product (GDP) per capita per day is currently at 7,000 Ugandan shillings ($1.90), and many live far below.
Paying 1,000 Ugandan shillings ($0.28) per day for internet data of 50 megabytes and an additional 200 shillings tax is a major challenge as 200 Ugandan shillings ($0.05), is a kilogram of maize in Uganda.
The study further dives into the misconceptions that have contributed to the rise of these types of taxes across the region. The fundamental misunderstanding of the impact of social media on the Internet value chain and the lack of a clear definition of OTTs have made evidence-based discussions about the impact of OTTs difficult.
As a result of these misconceptions, regulatory interventions have used unsuitable tools and have been carried out by the organizations not fit for implementation.
The just-concluded third Specialized Technical Committee on Communication and Information Technologies (STC-CICT) in Sharm-el-Sheikh, Egypt, called for the development of guidelines.
“We call for AUC to develop guidelines on privacy and Over The Top Services (OTTs), and submit guidelines to the fourth STC-CICT in 2021,” said Moctar Yedaly, Head of Information Society Division at the
African Union Commission.
Adding, “This study is a good starting point for understanding the nuances of the impact of OTTs on the ICT ecosystem in the region. We hope it will lead to regional discussions that would consider more productive digital taxation models, appropriate policies and regulatory frameworks” said Moctar.
The study proposes best practices to help Governments create an efficient taxation system while balancing the opposing objectives of collecting taxes, and economic growth, job creation and inclusion of the poor into the information society.
