[kictanet] Senegalese consumers called to boycott mobile phones to protest 2% tax increase on wide range of services

[alice]

(From Balancing Act)

Senegalese consumers called to boycott mobile phones to protest 2% tax 
increase on wide range of services

African politicians see the telecoms and Internet sector as the "golden 
goose" in terms of being able to tax its operators. In various countries 
a whole raft of different taxes have turned mobile operators into 
Government’s most effective tax collector. But this week saw the two 
main Senegalese consumer organisations organise a boycott of services to 
protest against a 2% tax called RUTEL that falls directly on consumers.

Along with all the other taxes they pay (including TVA/VAT), Senegalese 
consumers are now being asked to stump up an additional 2% across a wide 
range of telecommunications and Internet services. The tax is called 
Redevance d’utilisation des telecommunications (RUTEL) and it came into 
force on 1 February 2009. Law 2008-46 of 3 September 2008 put the tax on 
the statute book but its introduction has caused widespread anger.

So for example, a prepaid mobile kit costs about FCFA2,120 and with 
TVA/VAT FCFA2,500. With the RUTEL tax on the base price it now costs 
FCFA2,160, giving a final price to the consumer of FCFA2,550, an 
increase of FCFA50. The wide range of services the tax has been slapped 
on includes fixed and mobile services, IP-TV services, dial-up and ADSL 
subscriptions, recharge cards, international roaming, leased lines and 
interconnection charges between operators. The latter will have the 
effect of charging the tax twice over to consumers, providing a real 
case of "double-dipping", that bears down directly on consumers.

The Ministry of Commerce has pointed out that a range of essentials like 
food and fuel have actually come down in price but its figures have been 
contested in the discussions taking place on Senegalese blogs. It seems 
that the announced reductions in price often turn into price rises later.

As with TVA/VAT, the operators have been given the responsibility of 
collecting the tax and as a concession to the operators they are now 
freed of any taxes or customs duties on the import of mobile and fixed 
phones.

In reaction to this tax raise, Senegal’s two main consumer associations, 
l'Association des consommateurs du Sénégal (ASCOSEN) and l'Union 
nationale des consommateurs du Sénégal (UNCS) have called for a boycott 
of the use of mobile phones today, Friday 6 February 2009. "The 
Senegalese state has decided, in a unilateral manner, that is peremptory 
and without justification to raise by more than 2% the cost of 
telecommunications," the President of ASCOSEN, Momar Ndao told a press 
conference on Thursday. He estimated that the Government will be taking 
FCFA33 million a day from consumers’ pockets.

The joint plan of action for a boycott has been organised by sending SMS 
messages to consumers telling them the boycott will take place and 
calling on them to stop all bill payment, opening new subscriptions, 
buying credit from 8am to 3pm and stop using their mobile from 1pm to 3pm.

One of Senegal’s ICT sector associations, Le Rassemblement des 
entreprises du secteur des technologies de l'information et des 
télécommunications (RESTIC) issued a statement saying that it considered 
the boycott to be "counter-productive and unacceptable." The statement 
argued that:"Mobile service is not just a commodity for the majority of 
consumers but a necessity for most of them. This boycott will be a 
useless trouble to users and leave operators having to make up lost 
revenue." According to RESTIC, the operators and employers were not 
involved in the decision to introduce the new tax and operators were 
already paying up to 3% on turnover as a contribution to the universal 
service fund Fond National de Développement de Service Universel 
(FNDSU). Therefore it invited the Government to rethink all taxes placed 
on operators.

There have been two consumer boycotts of mobile phones in Nigeria, the 
first in 2003 caused a significant dent in operators’ revenues but the 
second several years later had much less of an impact. There was talk of 
a similar boycott in South Africa but it never seemed to get off the 
ground. The complicated way the boycott has been structured in Senegal 
(with different hours to boycott different services) may also mean that 
the impact is not as great as its promoters might hope. A similar all 
inclusive tax was introduced in Ghana in mid-2008.

African Governments in the main do not have a strong record of tax 
collection and have turned mobile operators into their chief tax 
collectors. The largest proportion of Government revenues comes both 
from TVA/VAT collected directly from consumers and also the wide range 
of other taxes they pay the Government. African politicians of all 
stripes see the telecoms and Internet sectors as a "golden goose" that 
produces easy money.

The contradiction at the heart of this taxation policy is that there is 
clear evidence that the more you charge consumers for communications 
services, the less they will use them and the more it cuts out the 
marginal user who really struggles to pay for these services. President 
Wade has been one of Africa’s most vocal politicians in calling for the 
closing of the digital divide. A tax policy of this kind simply widens 
the divide.

For as one Senegalese blogger, Souleymane Jules Diop, wrote 
yesterday:"It’s not the phone that’s to blame. It’s (President) 
Abdoulaye Wade whose to blame." Perhaps this boycott will make African 
politicians think again before they reach out to stroke "the golden 
goose" for more money.