The GSMA, the organization that represents the interest of mobile telecom operators worldwide has called for the removal of specific mobile related taxes such as the communications service tax (CST) and the import tax on SIM cards.
There is a 20% import tax on SIM cards, and there is also a 6% direct tax on every call made from one network to the other, plus another 6% on the interconnect fee that the originator network pays to the network on which the call terminated.
Director of GSMA’s Spectrum Policy for Africa and the Middle East, Peter Lyons said “the 20% import tax on SIM cards must definitely be considered for removal and the 6% CST at both the wholesale and retail levels should also be considered for potential removal because they both put a burden on consumers,” he said.
He said the removal of both taxes would go a long way to encourage increased use of mobile and broadband services, which would have a multiplier effect on the growth of the economy and on productivity, in ways that could generate even better revenue for government rather than from direct taxes.
Mr. Lyons was speaking to journalists after a day’s workshop in Accra on how to speed up expansion of quality broadband service in Ghana.
The workshop, jointly organized by the GSMA and the Ghana Chamber of Telecommunications, discussed telecom industry related taxations policies, quality of service, IP Exchange, and how Ghanaians could maximize the benefits from the spectrum dividend that would be made available for broadband expansion after the migration from analogue to digital TV by 2015.
Mr. Lyons noted that between 2007 and 2010, five mobile operators generated GHC2 billion per year in taxes for government, adding that reports from the Ministry of Finance indicated 37% of the revenues of telecom operators went into taxes, and taxes from operators accounted for 10% of government income for 2010.
“This is huge and that is beside the fact that in that same year telecom operators made capital expenditure (CAPEX) of GHC700million to expand coverage and improve quality of service across the country,” he said.
Mr. Lyons noted that telecoms, unlike many other sectors, triggers growth in many areas of the economic and so direct taxes on the telecom industry is not necessarily the way to go for any country, as that had the potential of discouraging investment and thereby adversely impacting several sectors of the economy.
Indeed the International Telecommunications Union (ITU) recently urged governments across the globe to reduce and remove certain telecom and ICT-related taxes to encourage expansion and spread of ICT/telecom infrastructure to un-served and under-served areas.
But the ITU also acknowledges that in developing countries, where taxes are a major source of revenue for national development, the tax policies of those countries should supersede ITU regulations and protocols.
Director of Regulatory Administration at the National Communication Authority (NCA), Mr. Joshua Peprah said telecom operators are within their rights to call for tax rebates, but taxation is a matter of sovereignty, and no external forces could determine the tax policies of any country.
He said telecom operators, like any other business, would want every opportunity to avoid taxes but once they operate in a developing economy that depend on taxes to catch up with the fast moving developed world, they have to comply.
“Government removed taxes on mobile handsets to allow easy import of affordable handsets into the country and that is how come today many Ghanaians have mobile phones so the time is right for government to now tax the service which is enabled by the nation’s spectrum because that is more easier to do than taxing handsets, which could not be easily monitored,” he said.
Meanwhile, the CEO of the Ghanan Chamber of Telecommunications, Kwaku Sakyi-Addo said what the telcos are asking for is not a complete removal of the CST (talk tax) but for government to remove the additional 6% on the interconnect fee.
“We are fine with the 6% direct tax on calls and we even pay it for our subscribers but the extra charge on the interconnect fee payable to the network on which the call terminated is a problem,” he said.
Mr. Sakyi-Addo noted that the NCA has been very supportive in the review of some of the charges and levies imposed by MMDA’s and other government agencies on telecom operators for installing infrastructure to provide quality service.
He said in good time the newly proposed more realistic and mutually beneficial figures would be put out in the public domain.
The workshop was attended by reps from GSMA, Telecoms Chamber, NCA, Ministry of Communications, all telecom operators in Ghana, service providers/vendors, tower companies, and a number of other industry related institutions.