Kigali — Mobile phone experts have advised East African countries to lower excise duty on airtime to 3%.

Only Rwanda has been charging the 3% rate in the region, but increased it to 5 % in this year's budget.

A report commissioned by the GSM Association notes that East Africa has extraordinarily high tax rates on mobile phone airtime.

Currently, excise taxes are levied at 10% and 12% in Kenya and Uganda respectively.

Tanzania has increased it from 7% to 10%, whilst Rwanda increased it to 5%.

The report titled 'Taxation and the growth of mobile in East Africa' aims to understand the potential impact of excise taxation on mobile penetration and usage. GSMA is a global trade association representing the interests of GSM mobile operators, manufactures and suppliers worldwide.

The study notes that mobile phones are revolutionizing the lives of millions of people in the region and will continue to be the primary means for the great majority to access voice, data and internet services.

"Restructuring mobile taxes can be a win-win solution for government, business and consumers," says the 178-page document compiled by Deloitte, a global auditing and consulting firm. Excise duty also restricts the affordability of mobile services for many millions of East Africans, it notes.

Globally, only a small minority of countries, around 17 in total, impose mobile specific taxes.

In Africa, eight countries do so and a substantial number of them are members of the East African Community.

The report estimates the effect of harmonizing taxes to 3% across all countries and estimates the impact by assessing likely tax revenue impact over a 10-year period from 2009 to 2019 against a base case of no intervention.

By lowering the excise duty on mobile services, governments can expect to reap more money in the tax and extend the essential mobile franchise to poorer sections of society.

Analysis shows that a 10% increase in mobile penetration leads to a 1.2% increase in GDP in the long-run across developing countries.

In all East African countries, mobile telephony has had a substantial positive impact to economic welfare, increasing GDP and generating employment opportunities both in the mobile communications sector and the wider economy.

Deloitte estimates that the mobile industry contributed between 5.1% and 4.4% of GDP in 2008 in the region.

"If we further include the intangible benefits gleaned by consumers this impact rises to between 6.0% and 4.7% of GDP in 2008," adds the report.

The mobile communications sector is considered a success story in East Africa, increasing the ease of communication between individuals and businesses.

There have been significant increases in coverage and penetration over recent years and mobile has, for the vast majority of consumers, become the preferred method of communication.