Transmission: India lost $1.5 billion in 2020 by not taxing electronic transmissions: think tank

Ahead of a key World Trade Organization (WTO) ministerial meeting next week, a Geneva-based think tank has estimated India’s potential revenue loss from not taxing electronic transmissions at US$1.5 billion in 2020 and US$4.9 billion in 2017- 20 tariffs estimated based on the border (the maximum tariffs promised by each country).

According to a research report by South Centre, an intergovernmental organization of developing countries, the loss of revenue was due to the import of items such as films, music and video games. The research paper advocated tariffs to “regulate conspicuous consumption by imports.”

WTO members have not been able to impose tariffs on electronic transmissions since a temporary moratorium was imposed in 1998 – something India opposes.

India’s revenue loss based on applied tariffs (the tariffs countries actually levy) was US$796 million in 2020 and US$2.55 billion in 2017-20, it said.

Developing and least developed countries are losing tariff revenue, especially at a time when imports of digitized goods have surged during the pandemic.

“They are not only losing fiscal space, but also their regulatory space, as they are unable to regulate the growing imports of digitizable products, especially luxury items such as films, music and video games,” the newspaper said.

India’s revenue loss is more than US$500 million as estimated in a UNCTAD report released in 2019.

“This shows how the loss of revenue because of the moratorium is gaining momentum,” an official said.

Developing countries and LDCs lost $56 billion in tariff revenue between 2017-20, according to the South Center report.

Noting that this loss stems from the imports of only 49 products (at six-digit HS values), it said: “Without clarity on the definition of electronic transmission (ET) and therefore on the scope of the moratorium, the continuation of the WTO A moratorium on tariffs on ET may result in significant tariff revenue losses for developing and least developed countries in the future.”

The loss exceeded $100 million for China, Indonesia, Pakistan, Russia and South Africa, while it exceeded $1 billion for India, Mexico, Nigeria and Thailand.

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