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The Bawumia factor

He is the Vice President in recent memory that one cannot wish away in this our Republic. Dr. Mahamadu Bawumia, Vice President in the current government was once again in his best elements last Tuesday with country, kinsmen and women on his mind. The government of Ghana has increased the communication service tax from 6% to 9%. This is in quest to create a viable technology ecosystem in the country

Presenting the budget review and supplementary budget for the last half of the year 2019, Minister of Finance Ken Ofori Atta announced an increment of the tax from its current 6% to 9%.

“The Communication Service Tax (CST) was introduced in 2008 at an ad valorem rate of 6%. The tax is levied on charges payable by consumers for the use of communication services.

The Communication Service Tax, also referred to as talk tax, was introduced into the Country’s tax regime by the former administration of President Kufuor to support the financing of technology projects in the country.

Last year, tax revenue collected from consumers for using communication services in the country reached GHS 420 million, representing an increase of 27.7 percent.

The latest increment means that consumers would have pay more for the same service they enjoyed over a decade now. Consumers usually pay the tax on such services. Therefore the increment would be translated into cost to consumers. As this tax also affects Fintechs and their usage of telecommunication services, consumers of digital financial services should be ready to pay more.

The CST widens the tax bracket to cover the informal and rural sector through mobile phone usage. It therefore seems to be an effective way to improve coverage. However, the formal sector who already pay taxes through payroll, withholding tax among others will feel more of the heat.

Communication Services

Below are examples of communications services that consumers would have to pay more to enjoy.

Cable and satellite television

Video and music streaming

Telephone, including Voice-over-Internet Protocol (VoIP)

Mobile communications, and similar services

Fintech (Banks mobile applications).

Meanwhile, early this year Ghana ranked 25th on the list of countries in the world with low mobile data charges.

The statistics show that the price of an average 1GB of data is being sold in Ghana at $1.56 compared with other countries including Zimbabwe [ranked country with most expensive data charges], selling same data package at $75.20.

In Ghana, the research said data packages could go down as low as $0.34 and as high as $4.75, equivalent of GHS25.96.

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Henry Cobblah

Henry Cobblah is a Tech Developer, Entrepreneur, and a Journalist. With over 15 Years of experience in the digital media industry, he writes for over 7 media agencies and shows up for TV and Radio discussions on Technology, Sports and Startup Discussions.

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