[kictanet] The burden of taxing ICTs

Thu Nov 13 11:58:47 EAT 2014

Ahmed,

It is that we are at an infant stage in technological development, while a
few other countries are at the maturity stage. While we count our Facebook
/ Twitter users as technological achievement, a few countries are landing a
spacecraft 500Million KMs away on a comet.

So its no surprise that if we go head on with them, we will most certainly
lose.

I urge you to read a book such as this
http://www.amazon.com/exec/obidos/ASIN/1843310279/qid=1030373453/sr=2-1/ref=sr_2_1/103-6106433-7539046
which tries to explain how the rich countries got to where they are and
what they are doing to maintain the status quo.

A shorter version of this is found here
http://www.paecon.net/PAEtexts/Chang1.htm

Rgds

On Thu, Nov 13, 2014 at 11:16 AM, Ahmed Mohamed Maawy <
ultimateprogramer at gmail.com> wrote:

> 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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>>> >>
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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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>>
>> Unsubscribe or change your options at
>> https://lists.kictanet.or.ke/mailman/options/kictanet/ultimateprogramer%40gmail.com
>>
>> 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
>
> m-power.or.ke
> www.globalshapers.org <http://globalshapers.org/>
> www.okfn.org <http://okfn.org/>
> startupgrind.com
> www.volobroadband.com
>

-- 
*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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