Africa Is Killing Digital Commerce with Taxes
African countries are milking the new age of digital: Kenya just hiked taxes and levies on telecom services via its Finance Act 2018. The industry has responded with Safaricom, the industry telecom leader, increasing services across board. Simply, government has taxed its citizens (indirectly via firms) as companies will do what is necessary to protect their margins. It is an old saying – companies are people, my friend. Yes, all taxes paid by companies are paid at the end by people.
Yesterday, Safaricom announced that they had reviewed their prices for services that they offer which was due to the Finance Act 2018 which added a number of provisions. This Act increased the excise duty tax on voice, SMS and data to 15%, up from 10% and now we got to see how it affects pricing on these services.
This is the new pricing structure of voice calls, SMS and data after the revision and they are effective today.
I expect the volume of transactions to drop as the taxes and the associated increased prices of services make many Kenyans unable to afford the services.
From Zambia to Tanzania, Nigeria to Egypt, Africa is killing digital commerce with taxes. There is no tax our leaders do not like. This is very unfortunate. Unlike America which actually "waved" tax collection burdens on pioneer digital companies, Africa has read a different memo.
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When politicians need more money, apparently, the quickest route to getting that is to levy more taxes. Any upward review in company tax, VAS tax or VAT, obviously the businesses will pass it to consumers; no other way. You do not tax companies, rather you tax people.
We have a situation where governments across Africa struggle to create jobs, interestingly with emergence of internet and web at scale, many African citizens created jobs for themselves. And then politicians realised that people seem to be improving their living standards, then they remembered taxes.
When you have folks who do not know how to create wealth, but are specialists in squandering money, and the same people sit in offices, legislating and issuing policy statements; this is the outcome.
This thing called government is a scam, the world could be more peaceful without governments.