This article from the Economist (which you have to have a subscription to access yourself) discusses the effect of taxation of mobile-phone services on the adoption of mobile phones in countries around the world. The article is particularly interested in the effect of taxation on the adoption of mobile phones in developing nations because:
"Mobile phones are increasingly recognised as powerful tools in the fight against poverty, since they reduce transaction costs, facilitate entrepreneurship, and substitute for slow, unreliable transport and postal systems."
The conclusion is unsurprising: countries with high tax rates have less mobile phones per capita. In fact, the article says that every 1% decrease in mobile phone taxes would increase mobile phone penetration in a typical developing country.
The question I would be interested in is first of all, why do you think governments single out mobile phone services to tax in the first place? Also, do you think this is an effective tax (in terms of raising a lot of revenue and limiting the loss of efficiency)?
Also, what about the claim that mobile phone services are a powerful tool for fighting poverty? What are some specific ways that mobile phones could help alleviate poverty (perhaps specific examples of the claims in the above quote)? Do you agree that alleviating mobile phone taxes will help the poorest countries of the world?
2 comments:
Cell Phone services would greatly help developing countries in Africa. Poorer areas that do not have phone lines of any kind have to resort to mail carrier service, which means that communications of any sort dealing with business and trade will always be delayed. Removing cell phone taxes would greatly benfit poorer coutnries because The cell phone allows for business to happen at a signigicantly higher rate. Farmers and merchants
can make trades and other transactions, which leads to higher trade circulation and a much more efficient commercial environment for those actively participating in trade.
David Wyant
Cell phones can most certainly have a positive effect on the poor. Real life example: My dad visits factories in China frequently that make shoes for his company. One thing he told me is that all the workers now have cell phones and what they are doing is text messaging each other trying to find what factories pay the most. True story.
Taxing cell phone use is probably not going to work very well, as Kimberly said its generally an elastic good, except for people who use cells as their primary phone service.
-Foss
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