Malawi pressed to scrap per-gigabyte internet tax, SMS

Malawi government is being pressed to scrap a planned tax on internet data traffic and and phone text messages (SMS).

The opposition and Civil Society Organisations (CSOs) asked government to drop its plans, warning that increasing the cost of web usage would be retrogressive for the developing nation.

Minister of Information Kondwani Nankhumwa has also reportedly cautioned Finance Minister Goodall Gondwe, who announced the new tax measure in his budget statement, at that internet levy would negatively defeat the drive of making telecommunications services affordable.

In a letter addressed to Gondwe dated 28 May 2015 that Nyasa Times has seen, Nankhumwa fears the newly introduced 10 percent excise duty on text messaging and internet data would largely affect poor Malawians.

Nankhumwa in the letter said in a sector which already has a number of taxes, telecommunications operators were likely to transfer the imposed taxes on the provision of the services to the end users.

“Analytical research demonstrates that the telecommunications/ICT sector tax revenues play an important role in national public services. This role must be weighed against potentially adverse effects that the taxation can bring to the growth of the sector, broadband and penetration and the country’s economic growth,” reads the letter.

The minister said the proposed taxes on usage and consumption taxes would have a negative impact on the poor Malawians as subscribers would have to pay for the same access charge as the better off Malawians who would also has to pay more for usage on the same services.

Nankhumwa tells Gondwe; “If no taxes are imposed, the net effect from the increased volumes (assuming a 10 percent growth subscriber base and volume of data similar to 2014 rates at the same tariffs prevailing currently) will be compensated by an income tax and the existing consumption rates at the current prevailing rates

“The spill over effect to other sectors that rely on telecommunication/ICT services for their productivity may also affect potential income in the long run.”

Meanwhile, the Malawi Revenue Authority (MRA) has since written operators who increased the tariffs to suspend the increase, saying the new tax is supposed to be implemented by July 1 2015 after all necessary bills are passed (as they are or after some amendments) in the National Assembly.

Malawians pay the highest tariffs to access communication services in the region, according to the International Telecommunications Union (ITU) December 2014 report.

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