Mobile phone users in Ghana are anticipating a 6 percent “pay talk tax” to be introduced on June 1.
Act 754, which Ghana’s parliament recently passed, gives the tax the legal basis to rake in much needed revenue to support the government’s youth employment initiative. A lack of funds is hampering the youth employment plan, which provides jobs to school graduates.
However, authorities at Western Telecommunication Systems Limited, one of two fixed-line service providers in Ghana, believes the new tax is regressive.
“The tax will have serious consequences on operations of communication service providers,” Acting Managing Director Ursula Owusu said, affirming her view that the tax has potential to limit customers’ talk time.
Owusu, who has been very vocal on the issue on behalf of the telecommunications sector, said the government could have explored other avenues to raise revenue, as a reduction in talk time would reduce service provider revenue.
The new act replaces import duties made up of a 12.5 percent Value Added Tax (VAT) and a 2.5 percent National Health Insurance Levy on mobile phones. The measure also requires service providers to collect the 6 percent Communication Service Tax on behalf of VAT Service.
Many have condemned the new tax as another burden on the poor. However, Minister of Finance and Economic Planning Kwadwo Baah-Wiredu argues that it will reduce mobile phone prices and increase accessibility.
The percentage tax comes up to GHp0.01 (US$0.0098) per minute of talk time.
The government says the import tax on mobile phones was evaded, but the talk time tax will widen the tax net and ensure that maximum revenue is derived from the industry.
Other forms of service that will incur the tax include talk time on fixed telephone lines, SMS (Short Message Service) messages, cable and digital satellite television services and Internet services.
Most analysts have criticized the timing of the tax’s introduction during an election year, as it has potential to decrease the popularity of the ruling New Patriotic Party.
The talk tax has faced massive protests from a number of organizations, such as the main opposition group, the National Democratic Party, and the Trades Union Congress, which accused the government of being insensitive to the plight of Ghanaians.
