Research ICT Solutions IMPACT OF UGANDA S ICT TAXES

Transcription

1 Research ICT Solutions IMPACT OF UGANDA S ICT TAXES

2 EXPECTED IMPACT OF THE SOCIAL MEDIA (SM) TAX Social Media Tax: = less data consumption = less MNO revenues = less VAT = less custom excise = less corporate tax Study aims: To put a number to the net tax effect Estimate impact on GDP growth and job creation Side effects: Wider mobile money use (to pay taxes) Increase in consumer VPN skills

3 DATA AND MOBILE MONEY REVENUES KEY FOR MTN S PERFORMANCE Total Revenue in R(m) 2,051 2,416 2,624 2,665 2,540 2,608 2,804 2,661 2,506 2,687 2H17 1H17 2H16 1H16 2H15 1H15 2H14 1H14 2H13 1H Data + Digital revenue in R(m) H13 2H13 1H14 2H14 1H15 2H15 1H16 2H16 1H17 2H17

4 IMPACT OF SOCIAL MEDIA AND MOBILE MONEY TAX Data use mobile money transactions Without Tax With Tax Mobile broadband and mobile money are still going to grow after the initial shock, but from a lower base and potentially also at a lower rate

5 IMPACT OF EXCISE TAX ON VOICE AND SMS TRAFFIC - EXAMPLE GUINEA Total voice traffic (millions of minutes) SMS traffic (millions of SMSs) Intro of tax on voice Intro of tax on SMS Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Source: IMF, 2017

6 INTERNET AND SOCIAL MEDIA ARE SYNONYMS

7 RIA S NATIONAL SURVEYS: SHARE OF SOCIAL MEDIA USERS AMONG INTERNET USERS SHOW THAT MOST INTERNET USERS USE SOCIAL MEDIA Figures for Uganda will be released in August -survey is still ongoing Rwanda South Africa Tanzania Nigeria Kenya Ghana Mozambique Source: Research ICT Africa 2017/8 After Access Survey

8 SOCIAL MEDIA TAX OF UGX 6000 PER MONTHS AS SHARE OF AVERAGE INCOME BY SUB REGION Kampala Central I Kigezi Central II Ankole Bunyoro Tooro Lango West Nile Teso Elgon Busoga Karamoja Acholi 2.4% 4.5% 5.7% 5.8% 5.8% 6% 6.6% 8.3% 9.2% 10.3% 11.1% 13.2% 14.2% 19.6% Bukedi 22.6%

9 MONTHLY SOCIAL MEDIA TAX AS & OF AVERAGE INDIVIDUAL INCOME Average HH income in UGX Average HH size Average Individual income SM tax as share of Individual income Kampala 938, , % Central I 569, , % Central II 463, , % Busoga 222, , % Bukedi 141, , % Elgon 260, , % Teso 357, , % Karamoja 220, , % Lango 370, , % Acholi 168, , % West Nile 294, , % Bunyoro 468, , % Tooro 436, , % Ankole 489, , % Kigezi 476, , % 2016/17 Uganda National Household Survey (UNHS)

10 IMPACT OF SOCIAL MEDIA TAX ON PREPAID DATA PRICES

11 MTN - PREPAID DATA PRODUCTS Bundled Data MB Validity Once off Price SM tax for validity Cost incl. SM tax Price increase ,500 6,000 7, % ,500 6,000 11, % Monthly Weekly Daily ,000 6,000 16,000 60% 2, ,000 6,000 26,000 30% 10, ,000 6,000 56,000 12% 30, ,000 6, ,000 6% ,000 1,400 6,400 28% 1, ,000 1,400 11,400 14% 5, ,000 1,400 21,400 7% % % , ,200 20% , ,200 10% 1, , ,200 4% WTF % Social bundle SWIFT % SWIFT 7 2,500 1,400 3,900 56% SWIFT 30 5,000 6,000 11, % Average 62%

12 AIRTEL - PREPAID DATA PRODUCTS Bundled Data MB Validity Once off Price SM tax for validity Cost incl. SM tax Price increase ,500 6,000 7, % ,000 6,000 11, % 1, ,000 6,000 21,000 40% 1, ,000 6,000 16,000 60% 1, ,000 6,000 26,000 30% 5, ,000 6,000 36,000 20% Monthly 12, ,000 6,000 56,000 12% 7, ,000 6,000 66,000 10% 25, ,000 6,000 96,000 7% 15, ,000 6, ,000 6% 20, ,000 6,000 81,000 8% 35, ,000 6, ,000 3% 51, ,000 6, ,000 4% 100, ,000 6, ,000 1% ,000 1,400 3,400 70% ,500 1,400 4,900 40% Weekly ,000 1,400 11,400 14% ,000 1,400 21,400 7% ,000 1,400 8,400 20% ,000 1,400 16,400 9% 3 days , ,600 20% , ,600 12% % Daily % , ,200 20% , ,200 10% Average 41%

13 AFRICELL - PREPAID DATA PRODUCTS Bundled Data MB Validity Once off Price SM tax for validity Cost incl. SM tax Price increase ,450 6,000 7, % ,400 6,000 10, % ,900 6,000 10, % ,750 6,000 15,750 62% ,500 6,000 19,500 44% ,500 6,000 25,500 31% 1, ,500 6,000 40,500 17% 1, ,500 6,000 50,500 13% Monthly 2, ,500 6,000 55,500 12% 3, ,500 6,000 65,500 10% 3, ,000 6,000 81,000 8% 5, ,000 6,000 95,000 7% 7, ,000 6, ,000 6% 10, ,850 6, ,850 5% 40, ,000 6, ,000 2% 100, ,000 6, ,000 1% 80, ,000 6, ,000 1% ,750 1,400 3,150 80% Weekly ,500 1,400 3,900 56% ,500 1,400 6,900 25% ,900 1,400 23,300 6% % % , ,200 20% , ,200 10% Daily , ,400 6% , ,700 4% 1, , ,200 4% 1, , ,700 3% 2, , ,700 2% 3, , ,200 2% Average 40%

14 UTL - PREPAID DATA PRODUCTS Bundled Data MB Validity Once off Price SM tax for validity Cost incl. SM tax Price increase ,500 6,000 20,500 41% 1, ,000 6,000 34,000 21% Monthly 3, ,000 6,000 71,000 9% 5, ,000 6, ,000 6% 10, ,000 6, ,000 5% Weekly ,000 1,400 3,400 70% Daily % , ,200 20% Average 26%

15 ASSUMING DATA IS USED EVERY DAY FOR SOCIAL MEDIA Prepaid data increase across all prepaid data products due to SM tax 62% 40% 41% 23% MTN Airtel Africell UT Number of products MTN Airtel Africell UT

16 SOCIAL MEDIA TAX DISCRIMINATES LOW USAGE DATA BUNDLES - I.E. THE POOR MTN Airtel Africell UT Price increase through SM tax 500% 375% 250% 125% 0% Monthly data in MB for data bundles below 5GB

17 IMPACT OF SOCIAL MEDIA TAX ON OECD BASKETS

18 CHEAPEST PRODUCT FOR 1GB PREPAID PER MONTH SM tax impact _Q2 2018_Q1 2017_Q4 2017_Q3 2017_Q2 2017_Q1 2016_Q4 2016_Q3 2016_Q2 2016_Q1 2015_Q4 2015_Q3 2015_Q2 2015_Q1 2014_Q4 2014_Q3 2014_Q2 Uganda was briefly the cheapest in Africa with offer from Smart with product Twemal Egogga Offering 100 MB daily for a month for a once off payment of UGX 1,000

19 CHEAPEST PRODUCT FOR 1GB PREPAID PER MONTH SM tax impact Ranked 10th cheapest without SM tax _Q2 2018_Q1 2017_Q4 2017_Q3 2017_Q2 2017_Q1 2016_Q4 2016_Q3 2016_Q2 2016_Q1 2015_Q4 2015_Q3 2015_Q2 2015_Q1 2014_Q4 2014_Q3 2014_Q2 Uganda was briefly the cheapest in Africa with offer from Smart with product Twemal Egogga Offering 100 MB daily for a month for a once off payment of UGX 1,000

20 CHEAPEST PRICES FOR PREPAID MOBILE BROADBAND FOR Q Monthly prepaid data without SM tax Price in USD with SM tax Price increase in % Ranking in Africa without SM tax with SM tax 100 MB % MB % GB % GB % GB % GB % GB % Average 70.3% SM tax adds UGX 6,000 per month to the bill, assuming every day SM use.

21 IMPACT OF MOBILE MONEY TAX

22 COST RELATIVE TO TRANSACTION AMOUNT AMOUNT MTN without tax MTN with tax Airtel without tax Airtel with tax % 72.9% 51.6% 65.7% 232.0% 232.3% % 75.3% 54.0% 68.1% 266.0% 266.3% % 24.3% 11.7% 15.8% % 26.4% 13.4% 17.4% % 11.8% % 12.9% % 12.0% 6.8% 9.7% % 13.8% 9.6% 12.5% % 8.5% % 10.0% % 7.5% 4.2% 6.2% % 9.2% 6.0% 8.0% 3.6% % 2.6% % 5.3% % 3.0% % Cash to cash transaction to unregistered user

23 AVERAGE COST RELATIVE TO TRANSACTION AMOUNT Without Tax With Tax 40.9% 31.9% 36.6% 36.1% MTN Airtel Cash to cash transaction to unregistered user

24 AVERAGE COST RELATIVE TO TRANSACTION AMOUNT MTN Airtel 14.9% 13.2% Price increase across all transaction amounts due to mobile money tax

25 CONCLUSION Social Media tax lets Uganda slips from 10th to 17th rank in terms of prepaid data prices Across OECD data baskets the SM tax results in a 70% price increase on average Across operator products the SM tax results in 23-62% price increase on average Mobile money tax results in a 13-15% price increase for cash to cash transactions to unregistered users.

26 NEXT STEPS Expand price analysis Estimating price elasticities Calculating net tax effect Estimate impact on GDP growth and job creation

27 Research ICT Solutions DR. CHTOPH STORK PARTNER, PHD, ECONOMICS christoph@researchictsolutions.com STEVE ESSELAAR PARTNER, MBA steve@researchictsolutions.com