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Developing World must cut mobile taxes

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Governments in the developing world should cut taxes on mobile handsets to help the poorest take advantage of the technology.

So says the GSM Association, after studying the mobile-phone markets around the globe.

The GSMA survey found that in 16 of the poorest 50 countries taxes make up more than 20 per cent of the total cost of owning a mobile. In 14 countries this would mean a yearly tax burden of $40. The GSMA is promoting a $30 handset to increase mobile use in the developing world. It believes lack of mobile phones is holding back social and economic development.

Partly because of the high taxes the black market in handsets is booming. The GSMA estimates that 39 per cent of sales in the 50 countries are black market - representing $2.7bn in lost tax revenues.

The GSMA welcomed India's decision to cut taxes, which it credited with that country's fast-growing mobile use.

The London Business School analysis of the data predicted a 20 per cent increase in mobile phone penetration if all taxes were removed. The LBS believes that a ten per cent increase in mobile phone penetration pushes up annual growth by 0.6 per cent.

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