WASHINGTON (October 27, 2014) – Information and communications technology (ICT) drives productivity growth in the developed and developing world alike. Yet despite this, many nations discourage ICT adoption by imposing discriminatory tariffs and taxes on cell phones, computers, telecommunications services and other ICT goods and services. However, until now there has been little data on which nations impose the highest additional costs on ICTs.
In the new report Digital Drag, the Information Technology and Innovation Foundation (ITIF) ranks 125 nations on the extent to which governments add costs to ICT goods and services. Thirty-one nations impose combined tax and tariff rates of over 5 percent of ICT product or service costs. Among the worst offenders are Bangladesh (58%), Turkey (26%), Brazil (17%), Iran (15%), and Argentina (13%). Another 40 countries impose taxes and tariffs of between 1 and 5 percent. The United States ranks 51st with 2.4 percent government imposed costs.
“Nations want their businesses and consumers to adopt and use ICTs, but perversely many are actually decreasing adoption by imposing discriminatory taxes and tariffs, which in turn lowers productivity and economic growth.” says Robert Atkinson, President of ITIF and co-author of the report.
The authors argue the solution is straightforward: eliminate discriminatory taxes and tariffs on ICT goods and services for both consumers and businesses. Nations should also eliminate non-tariff barriers to trade that serve to raise the price of ICTs, such as domestic preferences for ICT procurement, local data storage requirements, and other protectionist measures.
“A clear way for nations to enable faster economic growth is to spur the use of ICTs by businesses and consumers,” notes Ben Miller, Economic Growth Policy Analyst at ITIF and report co-author. “And many can do this with a simple stroke of a pen by eliminating the taxes and tariffs that so clearly inhibit ICT purchases.”
Read the report.
The Information Technology and Innovation Foundation (ITIF) is a non-profit, non-partisan think tank whose mission is to formulate and promote public policies to advance technological innovation and productivity internationally, in Washington, and in the states. Recognizing the vital role of technology in ensuring prosperity, ITIF focuses on innovation, productivity, and digital economy issues. Learn more at www.itif.org.