WBS calls for tax-deductible broadband

Johannesburg, 02 Feb 2006

Wireless Business Solutions (WBS) has appealed to the finance ministry to make private broadband Internet costs tax deductible, says CEO Thami Mtshali.

His rationale is that the incentive will encourage greater uptake for the service by individual end-users. According to the Organisation for Economic Cooperation and Development, local broadband penetration is 0.3%, compared to the worldwide average of 11.8%.

Mtshali`s comment comes in the run-up to finance minister Trevor Manuel`s budget speech, scheduled for 15 February.

Costs associated with broadband Internet access are only tax-deductible for individuals who work from home or who use their broadband connection for business purposes.

"Other benefits for SA are that broadband boosts gross domestic product (GDP). A recent report by KPMG Australia, entitled 'Australia`s Broadband Future`, estimated that increased broadband penetration would lift that country`s GDP by between 0.5% and 2.5%," notes Mtshali.

The benefits will be most noticeable in underserviced areas where mobile broadband is able to rapidly fill the void left by the absence of landline technology, he says.

"Broadband also provides greater access to educational information, expanded curricula and real-time collaboration among students. In healthcare, broadband will enable the practical implementation of telemedicine," Mtshali says.

Because a small business owner is not using broadband, does not mean the associated costs should not be tax-deductible for individuals, he explains. "This ignores that broadband is used at home by people looking for employment, study opportunities and engaging in other activities that benefit the economy.

"SA is experiencing massive tax revenue overflows with the national treasury predicting it to be between R30 billion and R60 billion this year alone. Added to this, a panel of overseas experts, including 13 economists from Harvard University, the London School of Economics and the Massachusetts Institute of Technology, who visited the country recently, asked minister Manuel to be 'bold and ambitious` in targeting key areas that could stimulate growth. There is a compelling case that broadband should be tax-deductible for individuals," he concludes.