TALK TIME TAX IN FORCE

THE Communications Service Tax (CST), popularly referred to as the “talk time tax”, has come into force.
The tax legally came into force yesterday, the Director of Budgets at the Ministry of Finance and Economic Planning (MOFEP), Mr Kwabena Adjei-Mensah, told the Daily Graphic in Accra yesterday.
The six-per cent excise tax on airtime will be charged on the use of all multi-media enabled communication in the country.
A minute of airtime spent on the use of mobile telephones, the Internet and fax machines and other technologically enabled communications will attract the six per cent tax.
The excise duty was introduced by the government in the 2007 budget to replace the old system of taxation, where import duties and value-added tax (VAT) was charged on all mobile handsets imported into the country.
The government said the country was not deriving maximum revenue from the expected taxes on mobile handset imports because most of them were either smuggled into the country or were brought in with no declaration at the country’s entry points.
The introduction of the tax generated public debate, with those in favour lauding it as an appropriate tax mechanism and those against it labelling it as an additional financial burden on Ghanaians
Mr Adjei-Mensah said all arrangements for the tax to be implemented had been finalised.
These included meetings with communication service providers and other agencies, while all the guidelines and regulations to implement the tax successfully were also in place.
The tax, he said, would be collected just as the VAT and National Health Insurance Scheme (NHIS) tax on the handsets were collected.
“We expect that just as these taxes were collected, the new system will also be collected and returns made to the government,” he said.
Mr Adjei-Mensah said the government was also in negotiations to acquire equipment to monitor and evaluate the collection of the tax, adding that the process was far advanced.
He explained, though, that the equipment was just for monitoring purposes to verify taxes returned to government chest and not for purposes of collection.
Mr Adjei-Mensah expressed the hope that by June 15, the first tranche of the tax would have been returned to government chest.
“The tax is similar to VAT in its administration, thus by June 15, the VAT Service is to make returns on the tax,” he said.
According to the 2007 Budget, the impact of the tax is expected to be minimised with further technological advancement and improvements in the communication sector.
On May 23, 2008, the VAT Service planned a launch of the tax, which was aborted at the last meeting because the President, Mr J. A. Kufour, had made a prior announcement of some tax reprieves in connection with spiralling global food and fuel prices.

DAILY GRAPHIC, JUNE I, 2008, PG 1