[kictanet] The burden of taxing ICTs

Thu Nov 13 11:16:25 EAT 2014

Ngigi,

The fact that a phone from far east (imported from a mass market producer,
with shipping costs, thousands of miles away) could cause a local plant not
to operate is really not a good indication for us. Again, it is not the
taxation policy. Its really about what we need to do as a country to
support innovation. And its not only at the policy level, its also in the
civilian level.

Ahmed

On Thu, Nov 13, 2014 at 11:06 AM, Ngigi Waithaka via kictanet <
kictanet at lists.kictanet.or.ke> wrote:

> 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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>> >>
>> >> 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.
>> >>
>> >> KICTANetiquette : Adhere to the same standards of acceptable behaviors
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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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>
> 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.
>
> KICTANetiquette : Adhere to the same standards of acceptable behaviors
> online that you follow in real life: respect people's times and bandwidth,
> share knowledge, don't flame or abuse or personalize, respect privacy, do
> not spam, do not market your wares or qualifications.
>

-- 
*Ahmed Maawy*
Executive Director - M-Power (CBO)
Shaper - Global Shapers
Ambassador - Open Knowledge
Director - Startup Grind Mombasa
Software Developer - Volo Broadband
(KE) +254 714 960 627
Skype: ultimateprogramer

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