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10.12.2007 Business & Finance

$100m From Talk Tax

By Daily Guide

THE MINISTER for Finance and Economic Planning, Mr Kwadwo Baah-Wiredu has projected that a whopping $100million can be garnered from the controversial 'Talk Tax'.

The minister was stating the reason for government's imposition of a tax of one Ghana pesewa on every one minute talk on telephone, saying the decision is in the national interest, and should not be politicized.

In an exclusive interview with DAILY GUIDE in his office, the minister explained that while the essence was to get more youth to access the cheaper mobile phones that would soon flood the markets, monies accrued from the tax would be invested into employment generation.

“It is not a monumentally negative policy as the operators are claiming. Instead, the revenue to be generated would be re-cycled into youth employment”, he said, adding that it had successfully been implemented in Pakistan and Kenya.

The minister pointed out that for the whole of last year, the country generated a paltry $4.9million from tax on mobile phones, and hinted that a much needed $100million could be generated if telephone airtime is taxed.

He has subsequently called on operators in the telecommunications industry, who are kicking against the tax, to come up with alternative suggestions, stressing that what government had brought to the table is a 'win-win' situation for all stakeholders in the industry.

He also called on social commentators to desist from creating the impression that government and mobile phone network operators were at each other's throat. He said on the contrary, the two parties should be seen as partners in development.

“I agree that telecommunication is a vehicle for development, but at the same time we need to improve the human resource-base of the country because it is an important asset of the nation.

It won't serve anyone's interest to create the impression that government and the network operators are in a tango,” he said.

Mr Baah-Wiredu hinted that Denmark has made a lot of strides in her telecommunication industry with nine out of every ten of her adult population, owning mobile phones. He therefore expressed the hope that with tax-free, cheap phones in the system, Ghana's tele-density would also shoot up.

It would be recalled that Baah-Wiredu, while reading the 2008 Budget Statement and Government Economic Policy in Parliament on 15th November, 2007, hinted at government's intention to tax phone usage, saying it would discourage phone smuggling into the country and generate greater revenue for development.

“Mr. Speaker, because it is easy to smuggle mobile phones, a great proportion of them enter the country undeclared and therefore untaxed. Import duties and VAT on such undeclared phones are lost to the state.

The nation is thus not deriving maximum revenue from the expected taxes on mobile phone imports,” he lamented.

This attracted a sharp reaction from network operators, who on 4th December, made their position known on the matter.

“The tax will disproportionately impact the lower cost calls on all networks. The very nature of this tax imposed across board for all subscribers, does not take the different social and economic means of consumers into consideration,” they complained.

A statement read by Ms. Ursula Owusu, Managing Director of Westel Company, and also the spokesperson for the telecommunications industry, noted that mobile phone, being a tool for social development, should not be considered a luxurious item and taxed as such.

But the minister explained that the continuous use of phones over a long period of time has its health implications, which would be left at the door-step of government as its social responsibility to take care of.

According to him, medical study had shown that mobile phone users stand a higher risk of getting cancer. 'That is why government is setting up the fund to save lives of the victims of the long use of phones,' he said.

Concluding, the minister said if there would be any losers at all as far as the tax was concerned, it would be the phone smugglers, who would no longer earn super profits.

By Bennett Akuaku

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