Paris-based International Chamber of Commerce (ICC) has urged countries across the globe to minimize the taxes imposed on telecommunications goods and services to unleash the multiplier effect of this sector on the economic growth and employment generation.

In an updated discussion paper on ‘ the adverse effects of discriminatory taxes on telecommunications services' issued on 11 December, ICC says: “ Far from being luxuries, the tools from this sector bring the building blocks of opportunity to the global information-based economy. Increasingly, public policy is oriented towards connecting the unconnected in order to achieve 100% adoption of advance telecommunications services.”

It adds: “Any taxes that have the effect of impeding that goal merit reconsideration.” The Paper has listed wide array of taxes on telecommunications levied in 24 countries that include Argentina, the United, States, France, Turkey, Nigeria, India and Bangladesh.

ICC contends: “Because telecommunications taxes often have the most stifling impact on the low income consumers who represent the greatest opportunity for achieving universal adoption of fixed or mobile broadband, these taxes are directly inconsistent with both Millennium Development Goals and the public policy of most countries that have implemented the taxes.”

With information and communications technologies (ICTs) playing vital role in accelerating productivity and efficiency in all sectors, the rationale for removal of tax policies constraining telecom investment becomes transparent.

It has quoted a World Bank's econometrics analysis of 120 countries as concluding that each 10% increase in broadband penetration increases economic growth by 1.3%.

To buttress its contention, ICC has cited a 2004 study by two US economists that found that each 1% increase in the price of wireless service reduces consumer demand by between 1.12% and 1.29%.

As put by the paper, remedying the discriminatory tax treatment of telecommunications goods and services may reduce tax receipts in the short-term, but the longer-term increase in competitiveness and productivity, in GDP growth and employment based on more investments (in particular in next generation networks) on expanded use of advanced capability devices, on service demand and increased broadband penetration resulting from these tax reductions is likely to counteract this loss of tax revenues over time.