Science and Tech

Demand for connectivity services increases tax revenue

Demand for connectivity services increases tax revenue

In 2019, the year in which López Obrador’s six-year term began, the IEPS – a tax applied to the import and production of services and paid by users for connectivity – collected 6,086 million pesos, while in 2023 they collected 7,398 million pesos, which implies an increase of 25.1%, according to data from the Ministry of Finance and Public Credit (SHCP). This means that users have paid more for their telecommunications services, especially those who have a plan with telephone, internet and cable service.

In addition, users indirectly pay 19% in taxes on products such as pay television, mobile and landline telephony, which are taxed by 16% VAT and 3% IEPS.

Jorge Moreno Loza, a lawyer specializing in telecommunications, explained that the increase in tax collection is due to the growth in demand for telecommunications services that surged during the pandemic. Users now require more data and packaged services to continue their productive and entertainment activities, and companies need to deploy more networks and acquire more programming. In 2019, there were 80.6 million people who accessed the Internet, while in 2023 it reached 97 million Mexicans, according to ENDUTIH.

“Generating all this infrastructure so that the (connectivity) service arrives, having this content, the sum of this infrastructure, implies expenses with taxes and what the operators have to do is raise prices for the users,” he explained.

For example, in the last six years, telecommunications companies have seen increases in the import of materials such as fiber optics and the contracting of content for the programming schedule of pay television, the costs of which are passed directly on to users.

Recently, the Ministry of Economy (SE) decided to increase import tariffs on fiber optics by 35%, which will mean that operators such as Telmex, Izzi, Totalplay and Megacable could incur greater price increases in their connectivity services.

This is most visible in the constant price increases of the so-called triple play products that combine pay TV, landline telephony and internet, which imply the payment of the IEPS, since each service is taxed. Izzi, Megacable and Totalplay are some of the companies that usually increase their prices each year.

But for the specialist, the IEPS should not be part of telecommunications services, since it is not a luxury service, unlike products such as drinks. This tax, he says, only makes connectivity services more expensive and even creates greater barriers for users with economic limitations to access the digital world.

“I think that we should look at what this tax could be used for in terms of increasing telecommunications infrastructure, because so far it only serves as revenue for the government but not for the country’s own economic growth through communications networks,” said Moreno Loza.



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