Tanzania Taxing the Internet is not only absurd, it is outright dangerous

THE CITIZEN – EDITORIAL (OpEd) 

What you need to know:
In any modern economy, the Internet is regarded as a key service without which it is difficult for countries to achieve their economic growth targets.

It is acknowledged that infrastructure is a major factor in poverty alleviation and economic development.

Infrastructure plays a pivotal role in development as it facilitates people’s access to natural resources and social and financial assets. Roads and electricity are often cited as examples. Without roads, for example, it is difficult for people to get their agricultural produce to markets.

Many parts of African either have unstable electricity supply or no electricity at all, and this is true even in urban areas.

In any modern economy, the Internet is regarded as a key service without which it is difficult for countries to achieve their economic growth targets.

With reliable Internet connectivity, communication is made simple, and we all know how communication plays an important role in facilitating economic development.

The ongoing digital revolution is transforming economies, and driving innovation across all economic sectors. The Internet is paramount in achieving this.

Digitally transforming all elements of the economy – from education to healthcare and agriculture to telecommunications – requires innovative solutions and inclusive financial strategies. This means that we need to invest in building our Internet infrastructure. Introducing punitive taxes is counterproductive.

For Tanzania to realise its economic potential, its people need to be empowered with the necessary digital competencies. This can be done only if the country embarks on a journey to make the Internet readily and easily available to all.

Tanzanians need access to digital tools and technologies, while operating within a regulatory environment that protects the safety and interests of all people. Increasing the cost of accessing the Internet is a big hurdle to this endeavour.

If one considers the history of Africa’s economic transformation and development, they will realise, for instance, that the Internet is among factors which enabled South Africa to make huge strides in development.

Africa’s computing history dates back to 1921 when South Africa took delivery of its first tabulating equipment from the then computing, tabulating and recording company, which later became IBM.

Subsequently, several units were deployed to the country, and by 1959, IBM had installed the first actual data processing system in Johannesburg.

In 1980, Africa Centre d’Informatique du Rwanda took receipt of Africa’s first computer. This is among reasons why, despite its troubled background, Rwanda is making great strides economically compared to many relatively peaceful nations on the continent.

That is why the advice by Parliament’s Deputy Speaker, Mr Mussa Zungu, that the government should look into the possibility of taxing Internet gateways is ill-advised.

It is worth noting that the proposal was made during the same parliamentary sitting in which the government was forced to backtrack on its decision to introduce levies on mobile money and bank transactions.

Following sustained public pressure, Finance and Planning minister Mwigulu Nchemba announced the scrapping and reduction of some levies, but Mr Zungu said Tanzanians should support government efforts to raise adequate funds to finance its activities.

He said taxation of Internet gateways could help the government raise substantial sums since the source is currently not taxed.

This idea is dangerous as it considers the Internet a potentially source of government revenue, and not a facilitator of economic growth.

There is currently a nationwide outcry over the spiralling cost of living, and any decision to tax the Internet will make the situation worse. It is absurd to tax infrastructure that is meant to facilitate economic growth.

Mr Zungu and like-minded people should take note of the fact that Africa is being closely watched as the next big growth market.

There are many reasons for optimism – the African continent is home to some of the youngest populations in the world, it promises to be a major consumption market over the next three decades, and it is increasingly mobile phone-enabled.

It is along these lines that the same government, only a few years ago, removed taxes imposed on computers and their accessories as a way of promoting digital economy. I don’t believe that the government has forgotten this and will heed Mr Zungu’s idea of taxing the Internet.

An emerging digital ecosystem is crucial as a driver of growth, not only in Tanzania, but the continent in general because access to smart phones and other devices enhances consumer information, networking, job creation and financial inclusion.

Mr Zungu should not consider the Internet in isolation when it comes to its potential in facilitating economic growth in the country.