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Kenyans to pay more for internet, calls

Kenyans will from July 1, 2021, pay more for internet and calls if a proposed amendment in the Finance Bill 2021 to increase excise duty on the services is passed.

In a report tabled by the departmental committee on finance and national planning, the committee proposed to increase the rate of excise duty on telephone and internet data services from 15 percent to 20 percent.

The proposal suggests the deletion of the expression ‘the rate of fifteen percent and inserting the following expression ‘rate of twenty percent.’

In 2018, the government increased the excise duty from 10 percent to 15 percent on telephone and internet services in the Finance Act 2018, telecommunication and internet providers increased the cost of the services to factor in the taxes.

Safaricom, Kenya’s largest service provider, also increased the price of voice calls, data, and SMS, passing on to consumers the 15 percent excise duty tax that the government imposed on telephone and internet services with the coming into force of the Finance Act 2018.

In a statement on its position, the firm stated that it had raised the cost of calls by 30 cents, and SMS by 10 cents effective midnight.

The development is especially critical as the majority of Kenyans use their phones widely for internet access and communication (calls and SMS).

The increase in the cost of calls and the internet will come as an increased burden to Kenyans who are still reeling from the economic effects of Covid-19.

Kenyans have been up in arms against the increased taxation and fear that this increase in tariffs may negatively affect the gains made in mobile phone and internet penetration in Kenya over the last two decades.

In the same breath, the state has also seen mobile services evolve; people use their devices to access services such as drivers’ license applications, land transfers, paying for parking, and other licensing platforms, to mention a few.

Once the president signs the amendment, Kenyans will start paying more for the said services.

Internet penetration has been at the forefront in driving innovation surrounding mobile phone services and products for the self-employed.

Latest sector statistics show that Safaricom holds the highest market share in mobile data subscriptions with 68.2 percent, Airtel had 25.9 percent while Telkom’s share was 5.1 percent.

Mobile data make up 98.5 percent of Kenya’s internet market and grew last year with the introduction of Covid-19 curb measures including working and schooling from home as a result of the coronavirus pandemic.

According to the CA, the internet/data market experienced positive growth with rising dependence on digital platforms for work, learning, healthcare, shopping, and entertainment.

CA also said that during the period home and office internet connections also jumped.