[kictanet] The burden of taxing ICTs

Thu Nov 13 11:06:20 EAT 2014

Barrack,

The rain started beating us when instant gratification became more
important than our long-term health. The rain started beating us when the
metrics for our success became how many users we have on Twitter, Facebook,
Google, MSN as opposed to how many of our products & services are being
sold and used in the US, UK, Germany and such markets.

I like your example of the Gilgil Telecom plant. Tell me, what would have
happened if we had made it as policy that any phone to be sold in the
market for less than 20K had to be manufactured / assembled at the Gilgil
plant under license?

Maybe Samsung, would have balked at the idea, maybe Nokia would have as
well, but I can bet you one current phone manufacturer would have taken up
the offer. We would have maybe started with really ugly phones (wait, we
all started with big ugly phones), but you could bet by now, that firm most
likely would be manufacturing competitively for the local market as well as
EA market and maybe internationally as well.

But, what did we do instead? Over cocktails, graced by most major global
telecom executives, we announced to the world that anyone and their
'grandfather' can import phones to our market.; lets open up our markets,
lets remove all taxation.

What did we get in return a million users on Facebook, Twitter, Gmail and
our only phone manufacturing plant closed down for good.

That is 'progress', African style.

Rgds

On Thu, Nov 13, 2014 at 10:33 AM, Barrack Otieno <otieno.barrack at gmail.com>
wrote:

> Where did the rain start beating us?, we used to manufacture phones at
> Gilgil Telecom Industries, what happened to e-Mado?, indeed we need to
> study the pros' and cons of taxation on the technology sector.
> Probably we need a deliberately structured approach of introducing and
> managing the tax regimes  to safeguard and nature the growth of the
> technology sector. The banking industry exploded when banking fees
> were reduced. One of the factors that made Mpesa Juicy was the low
> transaction costs compared to what banks were offering. Just drawing a
> laymans correlation.
>
> Best Regards
>
> On 11/13/14, Ngigi Waithaka via kictanet <kictanet at lists.kictanet.or.ke>
> wrote:
> > 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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> >>
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> >>
> >> The Kenya ICT Action Network (KICTANet) is a multi-stakeholder platform
> >> for people and institutions interested and involved in ICT policy and
> >> regulation. The network aims to act as a catalyst for reform in the ICT
> >> sector in support of the national aim of ICT enabled growth and
> >> development.
> >>
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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
> >
>
>
> --
> Barrack O. Otieno
> +254721325277
> +254-20-2498789
> Skype: barrack.otieno
> http://www.otienobarrack.me.ke/
>

-- 
*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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