[kictanet] The burden of taxing ICTs

[Ngigi Waithaka]

Listers,

Taxation is *always* a double edged sword. In this instance, we would have
to ask ourself what is the *NET* effect we want to achieve with the
taxation?

As an example, our current and previous tax have been to increase ICT
usage, at all costs. Lower the taxes and all the computers and software
will become very cheap and affordable and ICT industry can take off.

However, that in my view doesn't have the necessary depth.

Take for example the local industry, every time you lower the taxes, and
especially import taxes, you make it that much harder for your local
industry to grow as it immediately faces stiff competition from the global
players. Your market becomes the dumping ground for every multi-national
who sell their products to your market cheap, and then immediately take off
with all the profits without re-investing in the local economy.

Taxation can and should address that.

If you look at the policies of most of the developed nations, one thing at
the center of their taxation policy is ensuring their local industries
thrive and force outsiders on the very least to consider moving their
manufacturing to their markets as that creates jobs and also leads to
knowledge transfer. A good example of this, it is not by chance that most
Japanese car manufacturers in the US have manufacturing plants in the US,
policy (including taxation) forces them to.

Also it is not a coincidence that there are hardly any US cars bought in
Japan (
http://americanautocouncil.org/sites/default/files/Japans%2BProtected%2BAuto%2BMarket.pdf
)

Now, we could ask, what have our current taxation policies brought us:
1. High consumer usage of ICT
2. Non-Existent local high-technology sector (we wouldn't built our own
Huwaei's, Motorolas, Samsungs as these multi-nationals are able to import
goods into our markets with almost no taxation, hence making it almost
impossible for a local to challenge them)
3. Non - existent high technology export (if we do not have local firms
that can build technology solutions, we have nothing to export)
4. Engineers(Electronics, Electrical, Industrial Design) who have no places
to work since there are not enough local firms that could use their
core-services (and repairing broken fibre links is not what one spends
5years learning electronics in campus to do)

So we will remain a country of high ICT consumerism while being a dwarf in
technology.

Regards

On Wed, Nov 12, 2014 at 5:36 AM, Ali Hussein via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> Listers.
>
> Interesting article.
>
> KITOS, hope you are listening...
>
> Kenya has in the past few years showed promise of renewed innovative
> capacity, especially in the Information Communication Technology (ICT)
> sector.
>
> But the new tax regime precipitated by the East African Community (EAC)
> tax harmonisation is about to reverse all the gains we have made thus far.
>
> Read on
>
>
> http://www.nation.co.ke/oped/blogs/dot9/ndemo/-/2274486/2516562/-/1xv3f7z/-/index.html
> *Ali Hussein*
>
> +254 770 906375 / 0713 601113
>
> Twitter: @AliHKassim
>
> Skype: abu-jomo
>
> LinkedIn: http://ke.linkedin.com/in/alihkassim
> <http://ke.linkedin.com/in/alihkassim>
>
> Blog: www.alyhussein.com
>
> "I fear the day technology will surpass human interaction. The world will
> have a generation of idiots".  ~ Albert Einstein
>
> Sent from my iPad
>
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-- 
*Regards,*

*Wait**haka Ngigi*
Chief Executive Officer | Alliance Technologies | MCK Nairobi Synod Building
T + 254 (0) 20 2333 471 |Office Mobile: +254 786 28 28 28 | M + 254 737 811
000
www.at.co.ke
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