DISCARD PROPOSED TALK TAX

OPERATORS in the telecommunications industry have asked the government not to introduce the proposed tax on phone talk time because it has the tendency to derail the national economy in the long term.
The operators dismissed assertions by the government that the imposition of the tax would increase national revenue to help offset the high unemployment rate under the National Youth Employment Programme (NYEP).
They contended that the tax would rather inflict enormous distress on service providers, subscribers and the government.
“Increasing taxes on talk time will reduce the amount of communication related to economic activity in all sectors and, therefore, negatively impact on national development,” they said.
The operators — OneTouch, MTN, Tigo, Kasapa and Westel — made the call at a news conference in Accra yesterday following the government’s decision to impose the tax with effect from next year.
The proposed tax of Gp1 per minute talk time on mobile and fixed telephones, which was captured in the 2008 budget presented to Parliament on Thursday, November 15, 2007 by the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, has generated intense public debate ever since.
According to the operators, the government did not consult them before announcing the proposed tax, adding that after a post-budget consultation with the government on the issue, they felt it appropriate to use the media platform to inform the public about the effects of the tax.
The Managing Director of Westel and Spokesperson for the operators, Ms Ursula Owusu, said the government might achieve its aim of increasing revenue with the imposition of the tax.
However, she pointed out, in the long term, revenue would dip because many mobile phone users would be discouraged from using the handset, while prospective users would also be deterred from owning mobile phones.
Ms Owusu said in view of the fact that majority of subscribers of all the networks had significant financial limitations, imposing such a tax “will disproportionately impact on the lower cost calls on all the networks”.
She said call prices in Ghana were among the lowest in Africa but the proposed tax on talk time could reverse that trend.
Ms Owusu said there was compelling evidence elsewhere to indicate that tax on talk time was not a profitable revenue option, in view of its negative impact on socio-economic development, and cited Uganda, Rwanda, Zambia, Tanzania, Kenya and Tunisia as examples.
She said already there was a VAT/NHIL tax element on talk time, in addition to customs duties, regulatory fees, corporate tax and other tax commitments of operators in the industry, adding that any further tax imposed would impact negatively on the industry.
Ms Owusu said the telecommunications industry was the single largest taxpayer to the government and cautioned that “we should not kill the goose that lays the golden egg”.
She urged the government to reconsider its decision in order to ensure a “win-win-win” situation for operators, subscribers and the government itself, otherwise the result of the tax would lead to a “lose-lose-lose” situation.
Ms Owusu said much as the operators would want to push for the non-enforcement of the tax, they would not want the issue to be politicised.
Earlier, mobile phone dealers in the country had told the Daily Graphic that the frustrations and other corrupt practices at the points of entry into the country were responsible for the inability of the country to rake in the needed funds on mobile telephone handsets.
For well known importers such as Mobile Phone People and City Phones, who had been in the industry for 10 and six years, respectively, exporters could not be blamed for the loss of revenue from the handsets imported.
While lauding the government’s waiver of duties on imported handsets, they said challenges existed at import clearing points that needed its attention.
The General Manager of Mobile Phone People, Mr Percy Anaab Bukari, discounted claims in the 2008 Budget that importers and dealers in handsets evaded tax and sometimes under-invoiced.
He said inefficient processes and systems at the points of clearing imports into the country were the challenges that rather needed government’s attention.
His sentiments were similar to those expressed by the Executive Director of City Phones, Mr Philip Boyefio, who expressed frustration over some of the processes at the airport when clearing mobile telephones.
He said when the value of imported handsets exceeded about $2,000, an agency, BIVAC, had to value the handsets and the process to get that done was tedious, cumbersome and time-wasting.
Mr Boyefio said security and customs officials at the country's entry points most of the time helped themselves generously to imported goods, saying importers could not complain for fear that the clearing of their goods would be deliberately delayed.
He added that with the fast pace of technological development that saw new mobile phones being developed by the second, importers could not afford to let their goods delay at the entry points. They, therefore, kept quiet in the face of such abuse by those who had to collect taxes on behalf of the government.
Both importers said stolen and sub-standard handsets were likely to flood the market, while weak systems and processes at the country’s entry and tax collection points would persist.
Mr Bukari said the nature of the mobile telephone importation sector enabled the importation of handsets from all over the world, including Finland, where Nokia is produced, and Dubai.
Mr Mohammed Adam, who sells phones in a glass case in Accra, said he was not sure that the waiver of tax on imported mobile handsets would have any significant impact on the price of the handsets.
According to him, dealers like himself who sold in glass cases in the city had to pay between GH¢50 and GH¢60 yearly to the Internal Revenue Service (IRS) and the Accra Metropolitan Assembly (AMA).
He said with such taxes and the dealers’ need for a fair amount of profit, no significant decreases might be experienced by consumers in the prices of the handsets.
Mr Johnson Akey and other mobile phone dealers all agreed that the new policy would not benefit them, since it would enable anyone at all to import mobile phones onto the market. They said in the long run, they would be driven out of business.

PUBLISHED DECEMBER 5, 2007 WRITTEN BY KOFI YEBOAH AND CAROLINE BOATENG