The Communications Service Tax (Amendment) Bill, 2020, popularly known as talk-time tax bill is completing its passage through Parliament under a certificate of urgency.
The bill, which is to amend the Communication Service Tax Act 2008 (Act 754) to provide for reduction in the tax rate from nine per cent to five per cent, is now awaiting presidential assent.
It was taken through all the stages of passage in a day in accordance with Article 106 (13) of the 1992 Constitution and Order 119 of the Standing Orders of Parliament.
The bill was first presented to Parliament and read for the first time on Tuesday, August 11, 2020, and the Speaker, Prof. Mike Aaron Oquaye, referred it to the Finance Committee for consideration and report.
The bill contains two clauses, with clause 1 of the bill providing a reduction in the tax rate from nine per cent to five per cent. The clause 2 provides for the commencement of the bill.
Rationale For The Bill
Chairman of the Finance Committee, Dr. Mark Assibey Yeboah, said the committee was informed that as a result of the restrictions and the protocols introduced to combat the coronavirus (Coivd-19) pandemic a number of innovations for communications had been introduced.
Presenting the committee's report in the House, he stated that “these innovations have resulted in an increase in the use of electronic communications services.”
According to him, a number of persons are now required to work from home while businesses and monetary transactions are also being conducted electronically.
He indicated that digitization was also a major government policy that was to catalyze economic activities and promote growth as part of the development agenda and help achieve the “Ghana beyond Aid” vision.
This was to provide some relief to households and businesses that now relied on electronic communication services such as data and airtime, he noted.
Fiscal Impact Of The Bill
Dr. Yeboah, who is also the MP for New Juaben, disclosed that the Finance Committee was informed that the change in the tax rate would result in a reduction in revenue from the tax of about GH¢90.1 million.
The reduction will take effect from September 15, 2020 to give the telecommunication companies sufficient time to reconfigure their systems to ensure smooth implementation of the reduced tax.
Support To National Youth Employment Agency
Section 5 of the Communications Service Tax Act, 2008 (Act 754) as amended by the Communications Service Tax (Amendment) Act, 2019 (Act 998) provides that at least 20 per cent of six percentage points of the tax shall be used to finance the national youth employment programme.
Following the proposed reduction of the tax rate, the House amended Section 5 of Act 754 to reflect the current reduction in the tax rate.