Imposing an additional tax on a specific good or service results in the reduction of its use. Generally, this is recommended for demerit goods such as alcohol and tobacco. In Myanmar, the government appears to believe telecom is a demerit good, collecting a five percent tax from all telecom bills since April 2016. The President says it will be used in sectors that “directly help people.” But this report shows that all funds collected after April have gone to general expenditures of government.
A report from the Innovation and Information Technology Foundation has been used as the basis for a good report in the Daily Star on the situation in the worst offender, Bangladesh. Of course, it did not hurt that they sought our comments. Our comments were based on the findings of the Systematic Review we completed on the benefits of mobile phones. For instance, in Bangladesh, the telecom infrastructure providers pay 55 percent taxes to import capital equipment and 24 percent for optical fibre cable. Mobile handsets are slapped with 21 percent duty when they enter the country.
The Government of Bangladesh announced its intention to impose more taxes on mobile bills last week. My op-ed in the Daily Star drew on economic principles and regional experience. There is no debate about the government requiring money. A dynamic sector such as telecom must make its fair contribution. Collection leakages in telecom are much less than in other sectors because it is a modern sector with automated billing and collection mechanisms.
The way most governments tax mobile use, the answer would seem to be yes. It is treated like cigarettes, a demerit good that imposes negative externalities on society; and is thus subject to additional taxes. The research reported below examined the question of whether mobile use is addictive (albeit in a different context, that of mobile use while driving) and found that no, it was not addictive: Paul Atchley, an associate professor of psychology at the University of Kansas, conducted research this year and last to determine whether young adults had enough self-control to postpone responding to a text message if they were offered a reward to do so. The idea was to determine whether the lure of the device was so compelling that it would override a larger reward. The research found that young adults would postpone the text.