An updated ICC discussion paper,
released today, highlights that a number of governments continue to tax certain
goods and services in the telecommunications industry at higher rates than in
other sectors, notwithstanding the urgent need to encourage growth in a challenging
economic climate. Several studies have highlighted the positive effect of the
telecommunications sector for improving productivity and economic growth across
an entire economy. This updated ICC paper includes several new examples of
countries, including Honduras, India, Malawi, Mexico, Montenegro and Slovakia,
where discriminatory taxes are imposed on telecommunications goods and services.
The discriminatory taxes on
telecommunications, the discussion paper says, are harming the long-term development
of the information and communications technology (ICT) sector. By raising consumer
prices, this stifles the adoption and use of broadband, mobile and other
advanced sector services.
Further, because the impact of these
taxes is often greater on lower income consumers, they hinder the chances of
countries achieving their policy goals for universal adoption of fixed or
Examples of these damaging taxes,
cited in the ICC discussion paper, include the introduction by France and Spain
in 2009 of a 0.9% levy on revenues from electronic communication service
providers, which the European Commission later argued, in both cases, was
incompatible with EU telecom rules. The discussion paper also points to the
USA, where certain states tax communications services at more than twice the
rate of other industries.
ICC says that cutting these
discriminatory taxes on telecoms goods and services might temporarily reduce
tax receipts in the short-term, but this loss will be countered in the long-term
by the benefits to a country of increased competitiveness and increased
This position is supported by a World
Bank study of data from 120 countries, which revealed that each 10% increase in
broadband penetration increases economic growth by 1.3%.
urge countries to update their view that telecommunications goods and services
should be taxed as luxuries, rather than services for everyone in society,”
said Eric H. Loeb, Chair of the ICC Commission on the Digital Economy’s task
force on Internet and Telecommunications, and Vice President, International
External Affairs AT&T.
“The ICT sector brings the building
blocks of opportunity to the global information based economy. Countries should
reconsider taxes that impede the drive for 100% adoption of advanced
communication services,” Mr Loeb added.
All the taxes highlighted in today’s
discussion paper represent opportunities for ICC to work with national
governments to avoid, minimize or repeal the identified tax.
Download the ICC discussion paper on the adverse effects of discriminatory taxes on telecommunication.
Visit the Commission on the Digital Economy page.
Visit the Task Force on Internet and Telecommunications.