Telecom analyst, Fouad Chalabi has taken a swipe at government over taxes charged on telephone handsets imported into Ghana.
According to him, zero tax on imported phones especially Smartphones will reduce smuggling of the device and help in the growth of the communication sector.
Speaking to Citi Business News, Mr. Chalabi asked government to focus on giving exemptions which will increase traffic for the operators which can be taxed.
“There has been a law that has been passed almost two years now that tax on mobile phone imports has been cancelled but go and import and you still will have to pay the tax on it. They will tell you that parliament has not approved the tax waiver even though government had agreed to remove the tax placed on mobile phone importation into Ghana,” he lamented.
Mr. Chalabi stated that importers are “still paying some 35% import duty on mobile phones which means what is in practice is different from what is on paper.”
He argued that even though government promised to remove a 20 percent import tax on telephone handsets in Ghana two years ago, that did not see the light of day, as it did not receive parliamentary approval.
“You know having more smart phones means more business and so having zero tax on the phones will curtail smuggling and government will make more money on the tax on calls or data usage,” he advised.
Government removes taxes on mobile phones
Finance Minister Seth Terkper in the 2014 announced that government will remove taxes on imported smart phones.
Mr. Terkper explained that the tax removal component was to promote the mobile phone dealing business in the country, however the proposal was not implemented.
Some importers of mobile phones and accessories say the situation is contributing to the increasing cases of tax evasion and smuggling of handsets into the country.
Parliament passes tax on mobile phones
The Parliament of Ghana, two years ago passed into law the Customs and Excise Amendment Bill 2013 which imposed a 20 per cent levy on mobile, cellular and satellite phones imported into the country.
Prior to this, there was zero tax on mobile phones importation.
The law was expected to enable government raise about GH¢49.8 million to support its developmental activities for the year.
The new law therefore repealed the Tariff No 6 of the Customs and Excise (Duties and other Taxes) Act, 2012 (Act 840).
The government’s immediate purpose for the tax at the time was to raise additional revenue for the budget-to mitigate a widening deficit.
In addition, it explained that the tax will protect domestic manufacturers of mobile phones and protect jobs in the sector.
The problem with this law as identified by stakeholders was that, government’s revenue generation; protection of local manufacturers and jobs in the sector are only a partial consideration of the overall costs and benefits of the law.
Ghana has over 25 million mobile phone subscribers, exceeding the 120% penetration rate. This figure however can be deceptive as it does not mean that all 24 million Ghanaian’s own mobile phones or subscribe to mobile phone services.
There is however a phenomenon of people subscribing to more than one mobile operator service.
The mobile ecosystem is made up of mobile operators, mobile phone users, importers and retailers of mobile handsets, vendors of recharge vouchers, repairers, and dealers in accessories and so on.
At the same time, mobile telephony has opened up more possibilities and has facilitated innovation in agriculture, education, health, security and better governance.
The contribution of the sector to the economy is significant and its potential contribution to GDP is estimated to be 2.40%.
A 2010 Ghana Statistical Service report had said the telecoms industry has been a key driver of economic growth.
It said the sector directly accounted for 7% of investments in Ghana, 10% of government income, and 2% of GDP.