Afghans Alarmed by New Telecoms Tax

An attempt by Afghan president Mohammad Ashraf Ghani to impose a ten per cent tax on all mobile phone and internet users is proving controversial.

Under the presidential decree, issued on September 26, subscribers must pay tax every time they top up, while telecom companies and internet service providers will pass on this new revenue stream to the treasury.

More than 23 million Afghan citizens currently use telecom services, and the government reports that the levy brought in 78 million afghanis (1.2 million US dollars) in its first ten days.

However the tax is now in question after lawmakers in the Wolesi Jirga, the lower house of parliament, unanimously rejected it on October 14.

In debates held in Afghan provinces by IWPR just before the parliamentary vote, participants expressed suspicion about a tax they saw as an unfair burden on ordinary people. Many feared the proceeds would be siphoned off by corrupt officials.

Fawzia, a participant in the debate in Faizabad, the administrative centre of Badakhshan province in northeast Afghanistan, said it was wrong to impose the tax at a time when people were already battling poverty and unemployment.

“The people of Afghanistan, especially Badakhshan, just can’t pay such taxes,” she said. “The government has taken this action without properly assessing and evaluating the consequences, and that’s wrong.”

Ghulam Rabani Haidari, who heads the government department for communications and IT in Badakhshan province, argued that the tax was fair. Although he acknowledged that the government must be transparent about how the money was used, he insisted that revenues of this kind were essential to building government finances.

“In return, telecom companies will also be obliged to provide better-quality services to their subscribers,” he added.

At a debate in Paktia in southeast Afghanistan, provincial councillor Taj Mohammad Mangal said people were still unhappy about the levy.

“We aren’t against taxation – it can help our country become self-sufficient and end our dependency on aid,” he said. “However, the concern is that this tax might find its way into people’s pockets.”

At a debate held in the northwestern Badghis province, economics lecturer Mohammad Rafiq Shekib agreed that imposing such a tax was perfectly legitimate as long as the government could guarantee the money would not be embezzled.

Shekib, who lectures at a privately-run university, added, “It is not yet clear whether the government is going to tax both registered and unregistered SIM cards, since most SIM cards in this country aren’t registered.”

In Kandahar in the south, provincial councillor Sayed Ahmad Sailab also raised questions about who would be taxed. He suggested that owners of unregistered SIM cards, who accounted for six out of ten users, would be forced to pay the tax, but the money would then be embezzled.

“Afghans have no objection to paying taxes but they do want transparency,” he said.

Other participants, too, were worried that the tax revenue would simply be stolen.

Ahmad, from the Qadis district of Badghis, said, “Applying a ten per cent tax to telecom services is all very well, but the government lacks the capacity to collect these taxes, and people will probably steal this money.”

Mohammad Musa, another participant, added, “It is fair for the government to want to tax the public or the telecom companies. However, these funds should go to the treasury, not into the pockets of corrupt individuals.”

Participants in a debate held in Pul-e Khumri, the capital of Baghlan, a province north of Kabul, were more positive about the move.

Economist Abdulalim Mohammadi said effective taxation was needed to replace the decline in the funding that foreign donors provided to the government budget. Revenues had to go up if spending on public services was to rise.

“The money paid by citizens should go into the government budget and be spent on government institutions, infrastructure and the salaries of state employees so that they provide better services and make people’s lives easier,” he said.

Qasim Totakhail, a representative of the Etisalat telecoms company in Baghlan, said that the tax was mandatory and that the 78 million afghanis collected in the first ten days represented a “substantial amount”.

In Paktia, a southeastern province, economics professor Mohammad Anwar Ahmadzai told a debate in the main town, Gardez, that the tax was reasonable. It might be hard for people to pay it in the short term, but in the long term it would benefit the whole of society.

Kamil Khan, southeastern regional head of the Afghanistan Telecom Regulatory Authority, said transparency was a given because telecoms firms “report to government on it on a daily basis”.

At a debate held in Wardak, southwest of Kabul, Attaullah Khogiani, a spokesman for the provincial governor, said the income would be spent on reconstruction projects and paying public servants.

Sayd Alim, the head of the Roshan telecom firm’s Wardak branch, said there were safeguards against fraud in place.

Economist Wali Mohammad Elham said the public would feel a greater sense of ownership if they knew their money was paying for infrastructure projects.

“Most of our reconstruction projects are currently funded and implemented by international agencies, and people don’t feel they need to protect them properly,” he said.

In Laghman, an eastern province, economy department head Mohammad Agha Mubarez said the high cost of maintaining security forces meant that extra revenue was essential.

“The current [annual] costs of the Afghan army are 4.1 billion US dollars, paid for by the United States, but the government needs to find domestic sources for this funding,” he said.

Homayoun Shams, head of Laghman’s telecommunications department, said the national ministry was working to reduce the cost of phone calls.

This report is based on an ongoing series of debates conducted as part of IWPR’s Afghan Youth and Elections programme.