Tuesday, January 11, 2011

Tax on mobile banking may kill the goose

I have blogged previously on the detrimental effect of taxation on the success of mobile money (Read here). Taxation on mobile transactions (and in some countries on the SIM cards required for mobile payments) inhibit the roll-out and acceptance of the service. This lower adoption rate leads to lower activity, less visibility and a GDP growth rate lower than what is possible. In effect, taxation on mobile banking leads to direct loss of income by the fiscus that is more than what will be collected through taxes.

The effect of taxation on mobile services in general has now been researched in more detail. A good report confirming this effect was recently released and is worth a read. (Read here).

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