fbpx

‘Talk Tax’ accrues GH¢420m in 2018

BY: Maclean Kwofi

Last year, tax revenue collected from consumers for using communication services in the country hit GH¢420 million. This represents an increase of 27.7 per cent over the 2017 figure, data sourced from the 2018 provisional fiscal data on public finances of the Ministry of Finance has showed.

The amount generated from the communications service tax (CST) was 4.56 per cent more than the projected GH¢401.8 million in the 2018 mid-year budget.

Much as the development is good news for the country, it has raised questions about the concept behind the introduction of the tax more than 10 years ago. The then Finance Minister, Mr Kwadwo Baah-Wiredu, in defending the rationale behind the introduction of the new tax, maintained that it was going to be the major source of finance for the government’s social intervention programmes specifically related to the youth employment in the country. Unfortunately, the revenue find itself in the consolidated fund with very little or nothing going to support such programmes.

Shift in original concept

A tax expert and Managing Partner of Ali-Nakyea and Associates, Mr Abdallah Ali-Nakyea, in an interview with the GRAPHIC BUSINESS on April 12 in Accra, observed that the development was an indication of a shift from the original concept of using 100 per cent of the revenue from the tax to finance youth employment initiatives.

Ghana News Headlines

For latest news in Ghana, visit Graphic Online news headlines page Ghana news page

"The communications service tax was originally designed to raise funds to help create jobs for the youth and then it was reviewed and expanded to include the use of almost all communications services. The problem now is the present change in policy direction where all earmarked funds have been redirected to the consolidated fund, giving the government the utmost freedom to disburse revenue to the various funds,” he said.

The change in policy direction, he noted, was presently putting pressure on earmarked funds such as the communications service tax and by extension starving programmes under funds with the needed financial support.

REGISTER: Graphic Business Stanbic Bank Breakfast Meeting

He stated that earmarked funds needed to be monitored to ensure that they were used to serve the purpose for which they were created.

Without monitoring, he said, the government would use the earmarked funds to support sectors of the economy it deemed appropriate and the actual problem for which those taxes were created would still remain.

Youth unemployment situation

The views of the tax expert was corroborated by the Dean of the Network of Communications Reporters (NCR), Mr Charles Benoni Okine, who observed that if the government could go back to the initial concept for which that particular tax was created, it would not find it difficult paying arrears of these young recruits under the various youth employment initiatives.

"The government can pay the allowances of these recruits without stress only if it will channel all the 100 per cent of the revenue from the tax to the youth employment schemes," he said.

Mr Okine, asked the government to halt directing the revenue into the consolidated fund and rather use it to solve the youth unemployment challenge which is presently becoming a national security threat to the country.

Should the concept be changed, he added, the GH¢420 million collected would be adequate enough to finance the present youth employment programmes such as Nation Builders Corps (NABco), National Youth Employment Programme (NYEP), among others.

About the tax

The communications service tax (CST) is levied on charges for the use of communications services that are provided by operators in the country.

It is imposed under Section One of the Communications Service Tax Act 2008, (Act 754) and paid by consumers of the communications service providers who in turn pay all the tax collected to the Domestic Tax Revenue Division of the Ghana Revenue Authority (GRA) on a monthly basis.

Instead of the initial arrangement of 100 per cent, the government now uses about 20 per cent of the revenue generated from the tax to finance the various youth employment schemes.

Of particular concern is the strong growth over the years in the revenue from the tax while the agencies salary arrears to these young recruits keep rising.
From GH¢216.6 million in 2014, the communications service tax rose to GH¢338.8 million in 2016 before increasing to last year's GH¢420 million.

Industry's contribution

Although high taxes often become a huge burden to the society, the Chief Executive Officer (CEO) of the Ghana Chamber of Telecommunications, Mr Ken Ashigbey, indicated that the communications service tax had become useful to the state “following the quantum of revenue it accrues every year.”

He stated the 27.7 per cent recorded in the revenue generated from the tax also showed how profitable the communications industry was to the country's economy.
"Although one of the heavily taxed sectors of the economy, this industry's contribution to the growth of the country's economy cannot be underestimated, with job creation and tax revenue generation high on the agenda."