Amended CST Bill Passed

Parliament yesterday approved the amended Communications Service Tax (CST) Bill.

This will allow the Ministries of Finance & Economic Planning and Communications to collaborate with service providers to monitor monies accrued to service providers and compute taxes payable to government.

An excise VAT introduced by the New Patriotic Party (NPP) administration in 2008, the Bill reportedly lacked clarity, hence the need for amendment.

The telecommunications companies started paying it from 2008 until March 2011 when they ceased payment.

Explaining the issue to journalists, a Deputy Minister of Finance, Cassiel Ato Forson indicated that 'the telecoms companies took the issue to court with an expectation that they will win. But they failed to realize that in their own books, they had accrued the money and made provision for it. As a result of this, they lost out on the case.'

The companies, nonetheless, billed customers with the taxes.

Recently, the Ghana Telecommunications Chamber raised an objection to the passage of the bill, indicating that the cost of telecom services could rise if was passed.

The bill imposes a six percent tax in addition to the existing surcharge of six cents per minute which government collects on international calls.

Kwaku Sakyi Addo, Chief Executive Officer (CEO) of the Telecoms Chamber, noted that already mobile network operators pay a 15 percent VAT and NHIL on incoming international calls to government.

Besides the foregoing, he said the Ministry of Finance was considering a further five percent Stabilization Levy on telecommunications services.

CST or Talk Tax was introduced as a Consumption Tax in 2008 to generate revenue for government from subscribers by taxing them six per cent on the value of services used.

In practice, network operators absorb this tax because of competition.

'The telecoms industry is the only sector that has maintained almost zero inflation in the Ghanaian economy consistently for more than 36 months despite rising inflation in other sectors.

'If Parliament passes the CST Amendment Bill it would lead to a substantial increase in the cost of telecommunication services, if operators pass on the cost to consumers,' Mr Sakyi Addo explained.

He said that conversely, if mobile operators absorb the new taxes it would make it difficult for them to justify the large investments required to expand infrastructure to meet the fast-growing demand for telecom services, particularly data.

Year-on-year inflation for communications was 0.4 percent in 2012, compared to an overall average of 8.8 percent.

Mobile network operators have invested nearly $6 billion in the Ghana's economy while Government captures approximately 37 percent of operator revenues as taxes.

Additionally, over 1.6 million jobs have been created by telecoms directly and indirectly.

 By Samuel Boadi