Author: Tomiwa Ilori
HRDA Alumni Coordinator/Researcher: Democracy, Transparency and Digital Rights Unit, Centre for Human Rights, University of Pretoria
Due to increasing underdevelopment in sub-Saharan Africa, many governments have looked towards several means to make up for deficits in domestic fiscal planning. One of the means through which governments have financed their budgets is by levying higher taxes on companies and individuals to be able to raise revenue.
While there may be legitimate reasons for states to levy taxes, in order for a tax system to be regarded as good and effective it needs to comply with at least five basic conditions: ensure a beneficial system; transparent in collection and use; less bureaucratic and equitable – every person should pay a fair amount of taxes not injurious to their well-being. While Information and Communications Technologies (ICTs) potentially impact the global economy, not all economies have thrived equally. In most sub-Saharan African countries, the impacts of ICTs have been least felt which damages the prospects of democratic development in the region.
Considering the wave of African countries now keen on legislating on internet taxes, there seems to be more justification for these taxes than improving revenue generation. Sections 18, 20 and 22 of the Tanzanian Constitution provides for the rights to freedom of expression association and work. The Tanzanian government levies a registration fee of more than US$900 for bloggers and other online content producers. The Electronic and Postal Communications (Online Content) Regulations of 2018 prescribes this fee in its Second Schedule. According to Sections 7(1) and (2) of the Regulation, this fee must also be paid by non-citizens of Tanzania who have their content accessed in Tanzania and refusal to pay such amount results in a fine of US$2200 and/or a minimum imprisonment of 12 months which depending on the case at hand, could be more. All of these regulations exist notwithstanding fact that 7.8% of Africa’s young population lives in Tanzania – making up 35% of its population which could benefit from the booming global e-commerce economy.
In Uganda, several online users have fallen by the sides after the introduction of internet taxes in the country. More than a year after the introduction of the tax, more than three million users (30% of those connected to the internet in Uganda) have stopped using the internet. The tax has also generated just 17% of the estimated revenue it was calculated to generate while more urban connected users are less affected compared to those who live in the rural areas. The tax increased broadband cost by 10%.
Despite strong opposition from stakeholders in 2018, the Zambian government also introduced internet taxation which has since denied access to more than 1.5 million internet users. Zambia has an internet penetration rate of only 40% which the introduction of the tax may further reduce.
The Finance Act of 2018 of Kenya has also been amended to introduce taxation of internet data services and fixed line telephone services by 15% with an already existing Value Added Tax (VAT) of 16% being paid by consumers. However, due to the large internet penetration base in Kenya at 85%, this increase may not have any meaningful negative impact on broadband access in Kenya.
In Ghana, the government recently increased the Communication Service Tax (CST) from 6% to 9% which is levied on consumers who use communication services of telecommunication providers that operate in the country. The new increase was made without the due process which requires stakeholders’ deliberations on the proposed increase. Benin and Nigeria have also at some point in time considered internet taxation but dropped it.
However, while Nigeria may have dropped its own policy towards internet taxes, it has come up with another means of levying such taxes by focusing on online advertisements. It intends to do this by relying on Article 21 and 80 of the Nigerian Code of Advertising Practice which allows the Advertising Practitioners Council of Nigeria (APCON) to vet advert materials. Expedited vetting will cost between US$450 and US$800 while regular vetting will cost US$70. Failure to comply with these requirements may incur a fine of US$1400. Even though the Courts have ruled that levying of fees on adverts are only limited to advertising practitioners, the Council seem bent on implementing the policy even though it does not seem to be in its purview to do so.
Given the high poverty rates in some of these countries where internet taxes are being introduced, digitisation provides prospects for e-commerce and more vigorous online debates on driving people-focused public policy. Also, in each of these countries, the Laffer curve theory which postulates that an introduction of tax will not necessarily yield the desired amount of revenue is evident. Tax experts in Ghana have specifically warned that the new increase in CST may not yield the desired revenue projections. In Uganda, the internet penetration may reduce drastically if the taxation continues for five years before it is reviewed. This is same for Tanzania whose government demands fees just about its GDP per capita as registration fees from bloggers. The amount to be realised by the state with this fee is not only negligible in contributing to Tanzania’s revenue generation, it seems more like a means of silencing the growing strength of online press in the country.
Countries like Tanzania will completely stamp out online freedom of expression and association online if the obnoxious registration levy for bloggers and internet taxes are not revised. This is also bearing in mind the rights to dignity, work and freedom of expression of these journalists and online bloggers have been adversely affected while also denying the public’s right to access information in Tanzania. These taxes are not only evidence of a bad tax system by not complying with the criteria above, they also adversely impacts on the fundamental human rights of the online public in Tanzania and Zambia as protected under national and international laws.
Article 6 of the International Covenant on Economic, Social and Cultural Rights (ICESCR) guarantees the right to gain living by work. Article 15 of the African Charter on Human and Peoples’ Rights (the African Charter) also provides for the right to work ‘under equitable and satisfactory’ conditions. This same right is guaranteed under Article 22 of the Tanzanian Constitution. Articles 40(1)(a) & (2) of the Ugandan Constitution also provides for the right to work under ‘satisfactory… conditions’ and ‘has the right to practice his or her profession…’
In the United Nations’ Guiding Principles on Extreme Poverty, States are advised that ‘Fiscal policies, including in relation to revenue collection, budget allocations and expenditure, must comply with human rights standards and principles, in particular equality and non-discrimination.’
All these provisions, together with the right to human dignity which being able to earn a living affords, are being violated by the introduction of these taxes in these countries. The right to freedom of expression is also under serious threats online as most of these taxes are targeted to reduce the impacts of deregulated public access to government policy making challenges through online platforms.
While it is not clear how the Nigerian advert regulating agency intends to collect the levies on online adverts, it is clear that such levy will not only affect small businesses that are teeming in the country, it will also raise questions as to whether it is a good tax system given no clear mode of collection. It also raises important questions on the propriety of licensing internet services which has been regarded as violating international norms and standards on protecting internet rights.
Facts have emerged that levying of internet taxes do not achieve the desired outcome of revenue generation but most African governments seem to continue with it given that it also helps to chill the enjoyment of human rights online. Also, given the Nigerian example of regulating online adverts, most of these regulations are already being carried out by these online platforms through their community guidelines and policies therefore such regulation by the agency is a waste considering the several adverse effects it would have on small businesses and the rights of many to work in the country.
The Kenyan example of internet taxation and the effect it has on users ought to show that it is best to develop broadband infrastructure that encourage affordability and access before introducing taxes. As most African countries are in the most expensive half of the table of countries with costly broadband access, countries that introduced internet taxes have had more people who no longer have access because the tax has become an unbearable burden making already expensive broadband even more expensive.
These issues show that African governments must take a human rights approach to internet taxes by respecting human rights, building proper broadband infrastructure and allowing businesses to thrive before milking them through counterproductive taxes. It is also an opportunity for many African states levying these taxes and those with plans to, to pay more attention to their obligations under international law. There is no point in levying taxes where not only the standard of living drastically reduces but also where there are hardly any results in improvement in public utilities and governance.
About the Author:
Tomiwa Ilori is an LLD Candidate and Researcher at the Democracy, Transparency and Digital Rights Unit of the Centre for Human Rights, University of Pretoria where he is also the Coordinator of the Centre’s LLM/MPhil in Human Rights and Democratisation in Africa (HRDA) alumni network.
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