DRC plans for mobile consumption tax cause more controversy

DRC plans for mobile consumption tax cause more controversy

In the Democratic Republic of Congo (DRC), where opposition to the recent Registre des appareils mobiles (RAM) – a tax on mobile devices – caused it to be withdrawn, it looks like the regulator, the Autorité de Régulation de la Poste et des Télécommunications du Congo (ARPTC), is trying a different money-raising approach, this time through a tax targeting consumption.

Press reports have been monitoring this situation for weeks already and have reported plans for a tax of US$0.0075 on each minute of each voice call, a tax of US$ 0.003 for each SMS sent and a tax of US$0.00005 per megabit of data.

While this seems modest, it could be much more profitable than the predicted RAM income. One press report suggests these taxes will generate at least US$15 million per month unlike the RAM whose monthly revenue was estimated at around US$4 million.

However, there are a number of issues that could make this tax even more controversial than the RAM tax. Firstly the taxes could make cheap bundling unprofitable. This would normally encourage operators to impose price hikes but the new law prohibits these (incidentally contradicting another law on pricing freedom). Bundling may therefore have to be withdrawn in favour of basic pay-as-you-go services, hitting poorer end users.

Some commentators have suggested that operator investment, recruitment and rural coverage plans could also be hit by the increased tax burden.

The country already has the most heavily taxed telecoms sector in sub-Saharan Africa. According to the GSMA, operators in DRC currently pay 34% of their total revenue in tax. Under the proposed new system, this rate could increase to more than 45% of revenues paid in tax.

The plans for the new tax had been widely reported in the local press, but the official announcement had been delayed until recently. It is now, in effect, law.

The tax is being justified as a payment for ARPTC’s services, such as monitoring the quality of services provided to the public, controlling the protection of personal data, controlling incoming and outgoing traffic and ensuring the technical inspection of the sector's equipment.

However, many local news reports are not convinced, suggesting that these levies on consumption could be more unpopular than the abandoned RAM tax and that they will hit low-income users the hardest.

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