Policy Think Tank, Imani Africa, has commended government for the reduction in the Communication Service Tax (CST).
In as much as the think tank applauds the government for the move, it still stands by its earlier position that the CST should not have been passed at all.
The government in 2008 introduced the 6% CST to raise additional revenue from communications services rendered by mobile operators.
The rate was increased to 9% in 2019 but has again been reduced to 5% in the recent mid-year budget review.
President of Imani Africa, Franklin Cudjoe, however, said in the wake of the coronavirus pandemic the reduction is welcomed.
He said, “First of all, it wasn’t supposed to be done in the first place. So we can say that we are grateful it was reduced but we also have to keep in mind the fact that now that the pandemic is upon us, people will spend a lot more on data so probably it was a wise decision but it shouldn’t have been imposed in the first place. It is however welcomed.”
Mid-year budget review
During the Finance Minister’s mid-year budget review presentation on Thursday, July 23, he announced a reduction of the Communication Service Tax, also known as talk tax from 9% to 5%.
This is to last for six months, as part of efforts by the government to alleviate the hardship that COVID-19 has brought upon Ghanaians.
CST saga
Mobile telecommunication companies in Ghana from October 1, 2019, began to charge customers the newly adjusted CST.
A statement by the Ghana Chamber of Telecoms stated that the 9% tax will be borne fully by consumers.
The increase in the CST was announced by the Finance Minister, Ken Ofori-Atta in his 2019 mid-year budget review. It was increased from 6% to 9%.
Following the increment, the telcos introduced an instant deduction of the tax.
For instance, a recharge of GHS10 worth of talk time gives consumers GHS9.2 as a result of the tax.
This sparked up a lot of complaints and arguments from Ghanaians.
The Communications Minister hence ordered the telcos to stop the upfront deduction of the tax.
According to the Minister, Ursula Owusu-Ekuful, the telcos were milking consumers over the implementation of the talk tax.
But the Minority Spokesperson on Finance, Ato Forson’s wrote to the Ministry requesting for the withdrawal of the directive.
He insisted that the directive was unlawful because Ursula, the sector Minister, did not have the power to issue such a directive.
Furthermore, a private citizen called Dzifa Gunu sued Ursula for ordering the telecommunication companies to stop the upfront deductions of the tax.
In his writ sighted by citinewsroom.com, Dzifa Gunu argued that the Communications Minister’s directive to the telcos to cease giving upfront notifications on tax deductions made from purchased airtime is an interference with his right to information as a consumer or subscriber and “thus contravenes article 21(1) (f) of the 1992 Constitution and same is illegal and wrongful.”
But the telecommunication companies later resolved to stop the upfront deductions of the CST. They decided to rather apply the tax through a tariff adjustment programme which took effect on November 26, 2019.