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Internet use affected by irrational tax: Oshada

09 Dec 2021

  • Says high taxes limited connectivity expansion
  • Claims telco industry stagnated for 3 years due to litigation
By Shenal Fernando Irrational and unjustifiable policies, including taxation by successive governments, have impacted the growth of Sri Lanka’s internet use, claimed Information and Communication Technology Agency (ICTA) Chairman and Telecommunications Regulatory Commission of Sri Lanka (TRCSL) Director General (DG) Oshada Senanayake. The use of the internet in Sri Lanka within the 15-plus population has increased to 44% as of 2021, from 37% in 2018. However, this growth in internet use over this period is not impressive when compared with peer countries such as India and Nigeria, whose connectivity had been lower than in Sri Lanka in 2017 but have since surpassed Sri Lanka. These revelations were made during the virtual research launch on “Digital Sri Lanka during Covid-19 Lockdowns” by LIRNEasia yesterday (8). According to the national survey conducted by LIRNEasia, internet use among Sri Lanka’s 15-plus-years-old population has increased by compound annual growth rate (CAGR) of 6% over the period 2018-2021 reaching 44% of the population from 37%. However, in India, internet use has increased by a CAGR of 25% over the period of 2017-2021, with over 47% of the 15-plus population using the internet. This represents a significant increase compared to 2017, when only 19% of the population were internet users. Similarly, in Nigeria, internet use among the 15-plus population has increased to 54% as of 2021, from 30% in 2017. Therefore, internet use in Nigeria has grown at a CAGR of 16% over the period of 2017-2021. Commenting on this issue, Senanayake claimed that internet penetration of Sri Lanka had stagnated over the period of 2017-2019, before increasing sharply over the past two years to reach 44%. In comparison, internet penetration of both Nigeria and India has grown progressively. Explaining further, Senayake claimed that the primary reason for the slow growth in internet penetration in Sri Lanka are the inconsistent and irrational policies of successive governments. “Sri Lanka has over multiple governments looked at the telecommunication sector as a tax haven. It has not been looked at from a pragmatic and holistic view, that this is an industry that has to be empowered to ensure that they can provide the basic piece of infrastructure which is connectivity, which is important for any country's digital transformation,” he explained. He questioned the rationality of imposing a tax on telecommunication towers when Sri Lanka is seeking to accelerate connectivity. According to him, from a technology or telecommunication perspective, such policymaking is not justifiable. Senanayake further claimed that this situation was exacerbated by the serious litigation situation the industry was embroiled in a couple of years ago, due to which the industry was completely fragmented. Consequently, the industry stagnated for over three years. “In 2019, there were 16 Supreme Court cases where the regulator and the industry were embroiled in. This meant that the complete regulation and management of spectrum and awarding of spectrum that is required to manage quality of service and to expand 4G and connectivity was at an absolute deadlock,” he added. He further pointed to the telecommunication tax regime applicable to citizens, which was as high as 49.6% in 2016 and has since improved, decreasing to 37.7% by 2019. However, he claimed that compared to other emerging countries, this represents a staggering rate of taxation which will have a negative impact on internet adoption. Commenting on the policy reforms introduced since 2019 to assist in Sri Lanka’s digital transformation, he claimed: “The first step we took was to ensure that this tax rate was completely cut down and we cut down the overall taxation to 22.6% again, and if you take the internet rate, it has come down to 10.2%.”


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