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26.11.2007 Business & Finance

One pesewa tax per minute on airtime

By Daily Graphic
One pesewa tax per minute on airtime
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One Ghana pesewa will be charged for a minute of airtime in line with the 2008 budget imposition of excise duty on airtime use of mobile phones, the Minister of Finance and Economic Planning, Mr Kwadwo Baah-Wiredu, has disclosed.

The new excise duty replaces the import duties and import VAT currently imposed on imported mobile phones.

In an interview Sunday, Mr Baah-Wiredu said the revenue to be generated from the new tax would be used as "a dedicated source of funding" for the National Youth Employment Programme (NYEP).

The announcement of the airtime tax in the 2008 budget has attracted strong opposition from sections of the Ghanaian society, including the National Union of Ghana Students, (NUGS) and mobile service providers.

In a press statement jointly signed by the NUGS President, Kweku Tuoho Bombason, and its Press Secretary, David S. Damoah, and issued in Accra, the union said it recognized the huge number of mobile phone users in the country, most of whom were students and non-income earners, and noted that the imposition of the tax would therefore, worsen their financial plight.

The Finance Minister, however, held a more positive view of the new tax, saying its introduction would ensure a more prudent tax administration in the mobile phone import market that had been beset with massive tax evasion by importers.

According to Mr. Baah-Wiredu, the government was mindful of the unsatisfactory services of mobile service providers and their high charges, saying that the excise tax would not be passed on to the end user.

He said discussions were still ongoing to finalise details of implementing the policy that might have to be backed with legislation.

He pointed out that the National Youth Employment Programme (NYEP) was an innovative programme that had already employed about 108,000 youth, with other more expectant youth waiting to be taken onto the programme.

He said a consistent source of funding was, therefore, needed, hence the excise tax on airtime as a source that would ensure the contribution of all for the benefit of all, that is, the employment of the youth of the country.

Mr. Baah-Wiredu gave the assurance that the government was open to ideas and discussions on the matter, as “we will not do anything to the detriment of the user.”

On the agitation by NUGS to block the policy, Mr. Baah-Wiredu said that was unfortunate, since the revenue would benefit them by way of employment opportunities after school.

He called for dispassionate dialogue on the matter to help in getting the best policy working for all.

He also denied the mobile service providers had not been consulted on the policy initiative, saying that staff of the Ministries of the Interior and Communications had held several meetings with stakeholders, including service providers, on the matter.

He gave the assurance, however, that discussions were not closed and reiterated that the government was open for dialogue.

The Member of Parliament (MP) for Ayirebi-Ofoase, Mr. David Oppon-Kusi, in another interview said, competition in the mobile phone sector would witness increasing better services at competitive prices.

He said competition had recently seen a reduction in the price of mobile phone chips and competitive costs on airtime from the various service providers.

Mr. Oppon-Kusi, who is also the Vice-Chairman of the Poverty Reduction Committee in Parliament, said with a base of about seven million users currently, an expansion to about 10 million would further see to the lowering of overheads for the service providers and better deal for users.

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