Friday, April 19, 2024

THE ISSUE: Another tax ‘burden’?


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IN RECENT WEEKS Barbadians have been up in arms over Government’s decision to increase taxation on their mobile phone services. Leading the charge has been a group called the Strictly Wi-Fi 2016 campaign.

Last month Minister of Finance and Economic Affairs Chris Sinckler announced that effective January 1 Barbadians will cellphones would pay 22 per cent value added tax (VAT) on voice and other tranmissions from their devices. He also said the $14 million expected to be raised from the measure would be used to finance university scholarships.

He said the so-called cellphone tax was intended to “increase the efficiency of tax administration, provide for the imposition of [VAT] on certain mobile services and enhance the enforcement provisions in the [VAT] Act and for related matters”. Based on Sinckler’s explanations, the tax will will affect all mobile transmitting devices, including tablets, which in many instances have access to data and even carry SIM cards.

This marked the third time that the current administration has announced its intention to impose some form of cellphone tax. Sinckler’s predecessor the late David Thompson announced one that never saw the light of day, and Sinckler previously put forward one which later had to be abandoned in favour of the new one that has been implemented.

“Government has to be very mindful of not acting in a manner as to put a brake on the productive advance of cellphone and mobile technology in our economy, because it is such an important part of doing business, making business more efficient and accessible,” he said.

“All of these things were in the back of the minds of the administrators and policymakers…when we were thinking about the imposition of this particular tax.”

Spokesman for the Strictly Wi-Fi 2016 campaign Andre Hinkson has been urging Barbadias to cancel their data packages as a sign of protest against the tax. The group has also been publishing a list of the free Wi-Fi hotspots available throughout Barbados.

Other Barbadians have also been voicing their opposition to the tax, but it is unclear how many – if any – have chosen to cancel their data plans from mobile service providers Flow and Digicel.

Taxes for such services are not new, and have been imposed in various countries, even if in different forms. The experts say the important thing is to ensure there is a balance between what the state desires in terms of taxation against the individual rights of citizens, and also the right to have access to broadband services.

According to a previous International Telecommunication Union study on the issue: “Analytical research has demonstrated that although the telecommunication/information communication technology sector tax revenues play an important role in supporting national public services, this role must be weighed against the potentially adverse effects that taxation can bring to the growth of the telecommuncation/ICT sector, broadband penetration and national economic growth.”

In a 2014 “tookit of principles and evidence” on mobile taxes and fees, which was produced in partnership with Deloitte, the GSM Association said the mobile sector across the world “faces a large and growing burden from taxation”.

This was even though “mobile is recognised as a key enabler of economic growth”, and in an environment where “the affordability of mobile services has been identified as a key issue of concern”.

“Despite the widespread growth of mobile, affordability remains a significant barrier to further adoption of the mobile technology required for these services, particularly in developing markets…taxation of mobile services remains a significant policy issue,” the report said.


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