Afghanistan’s Ten Percent Tax: An Unfair Burden In Absence Of A Competitive Telecommunication Sector – OpEd
By Habib Sangar
The imposition of a 10 percent tax on mobile subscribers has been unfair for the people who have to incur extra charges while Afghan government, as regulator, has failed to ensure provisions of quality telecom services at reasonable costs which could be achieved through adopting and enforcing a set of vigorous rules and regulations to facilitate free and fair competition among telecom companies.
Even though Article two of the Telecommunication Law of Afghanistan sets clear rules on quality of services and avoiding monopoly by the telecom companies at any time through ensuring free and fair competition, in practice not only is quality not being ensured, but the telecom companies are also deliberately exercising a monopoly over the market. Lack of a mobile number portability option is one of the main factors that has given leverage to the telecom companies to monopolize their existent customers by limiting their choice and ability to switch their service from the network they are with to another while retaining the same telephone number.
The majority of customers largely depends on incoming calls and has had their numbers for such a long time that they will not be willing to switch to a new service provider, regardless of the benefits they might be offered by other networks. Similarly, for businesses, which have had their numbers published in commercials, registered with government institutions, as well as maintaining contact via the same number with other business entities in Afghanistan and abroad, the cost of changing their numbers will be painful and excessively costly.
The Telecommunication sector in Afghanistan in the last 13 years has made significant achievements and greatly contributed in all aspects of socioeconomic development. But despite all these positive changes, the government, as regulator, has not been able to bring substantial reforms in the sector to increase customers’ satisfaction with the services they receive through free competition between the service providers. With a lack of competition, there is little to no incentive for service providers to strive to provide existing customers in their networks quality and improving services at competitive prices.
Considering the cut in international assistance and current sluggish economy, the Afghan government must find ways to generate revenue to fill the gap that has been created and which will further be expanded in years to come with the continual shrinking of international aid. Among many paths, one solution to this is taxation which your administration needs to impose in order to balance its budget, in which Afghan citizens need to pay their fair share as mandated by the Article 42 of the Afghan constitution. However, the taxation has to come with representation; the burden of recent tax on citizens has already raised some concerns regarding not only the transparency and accountability of the government, but also about very slow progress in the field of socioeconomic development to create jobs, improve quality of health services, education, as well as to maintain the physical security of its people.
Currently, in comparison to other countries in the region the cost of services, especially out of network, is very high. At the same time, some of the very basic but very important features and functionalities: voicemail, waiting calls, as well as costumer service via phone simply don’t exist. The cost of international calls- both calling from afghan carriers to other countries and vice versa- is skyrocketing. For instance, calling from Northern America to Afghanistan $5 can only grant 28-30 minutes of call time; while with the same amount of money the duration of such calls from the same distance to most of our neighboring countries can be far exceeded by hours.
The application of the mobile number portability option from one service provider to another will give the customer the choice to choose the service that is of a better quality and at reasonable cost. Such a feature will boost competition among service providers, who on their part, will strive to retain and attract new customers through improving the quality of their services while lowering the cost. By doing so, the government must show that it’s capable of bringing reforms that lead into impacting people in a positive way. Lowering the cost of services, as the Senate has proposed is not only the solution, but also it’s also against the principles of market economy to which Afghanistan is committed.
Similarly, government should further lift up the barriers on the licensing and provide incentives for the new entrants (i.e. new investing companies), especially for the Afghan investors, who have the resources and might be willing to invest in the sector. The major telecom companies, such as Roshan, Afghan Wireless, MTN, and etc. should, according to the best practices and considering the situation of Afghanistan, cooperate with the infant companies by sharing the technology and infrastructure they have already built. Because the cost of building a new infrastructure, such as cellular towers, wires, and etc. all together will be a painful and discouraging factor for the new comers to invest in and subsequently be in competition with the major companies, who already have a major foothold in the market and gained millions of subscribers signed up into their networks.
Implementation of such reforms will result into a win- win situation both for the government and the people. Companies have always been on the winning side, especially in businesses as lucrative as the telecommunication sector. It will, likewise, restore the confidence of the people, which have already been eroded, due to the slow pace of progress with the implementation of reforms President Ghani promised during his campaign. In order to achieve this, acting sooner would be better.
*Habib Sangar is Former Director of Afghanistan Parliamentary Institute and graduate alumni of Maxwell School of Citizenship and Public Affairs, United States. He can be followed @h_sangar