Mobile airtime is among the biggest contributors to taxes, raking in as much as KSh 26.3 billion into the tax kitty in 2018. This is an increase from KSh 16.1 billion in 2017, denoting a 63% growth.
Last year’s collection from airtime superseded the contribution of wines and spirits and cigarettes combined. The rise in taxes from airtime comes despite an additional excise duty of 5% implemented in 2018.
The increasing airtime revenue also denotes that Kenyans spend more time on their phones. According to a report on Standard, Kenyans spent 75 billion minutes on call between July 2016 and June last year.
This means that an average Kenyan spent two days in a year on the phone. Moreover, they sent a total of 55.2 billion texts during the period.
Airtime revenues show an upward trend, as compared to other sub-sectors. Collections from this subsector grew by 63% between 2017 and 2018 whereas collections from wines and spirits grew by 33%. Growth in wines and spirits staggers due to high taxes which discourage consumption.
While revenues from mobile transaction show a lot of promise, former CBK governor Njuguna Ndung’u warns that increase taxed burden will reverse the benefits.
“The increasing tax burden on the sub-sector and the consumers, though has raised concerns that the massive gains made in financial inclusion in developing countries made possible by retail electronic payments platform via mobile phone transactions may be reversed, resulting in a return to cash transactions,” Ndung’u told Standard.