USD 351 million lay unspent in Sri Lanka’s Universal Service Fund at end 2015

Posted on September 12, 2017  /  0 Comments

Unlike many countries, Sri Lanka did not impose a universal-service levy on customers of telecom services, directly or indirectly. One reason was the clause in the SLT privatization agreements that no universal-service levies would be imposed on the company. When you exempt the biggest player, you can’t then go and impose levies on the competitors.

So that was an intended good result of the privatization.

However, when the international telecom market was liberalized in 2003, the government imposed certain fees on incoming and outgoing calls that were to be kept in a fund and given to the companies which generated the calls when they provided documentation that approved rural infrastructure investments had been completed. In the first few years, money kept going into the fund and nothing came out. Then large amounts were disbursed. But at no stage were disbursements adequate.

In February, I submitted an RTI request asking for collections, disbursements and remainders. The early good performance had faded and by 2015 nothing was coming out of the fund. USD 351 million remained unspent. It’s possible, but unlikely that significant disbursements occurred since then.

Today, at the Sri Lanka Broadband Summit, I presented the data. I suggested that it was silly in this day and age to collect taxes from international calls (a presentation by Nielsen at the Summit showed massive use of Whatsapp and Viber to bypass the tax on international calls). I said they should just focus on spending the money quickly and shutting down the fund. Universal service objectives are best served by creating regulatory certainty and a predictable tax regime so that the private suppliers can do their job.


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