The Tax Justice Coalition is calling on government to reverse the increment in the communication service tax announced in the 2019 mid-year budget review last July.
The coalition in a statement issued on Monday October 21, 2019 urged the Ministry of Finance to reverse its decision which, it said, places additional financial burden on Ghanaians.
The mid-year budget saw the increment of the communication service tax from 6 percent to 9 percent effective September 4, 2019. Since the increment, prepaid mobile telecommunication service users have had to pay the tax upfront anytime they recharge airtime for either data or voice services.
According to the Coaliton, it first made suggestions to the Finance Ministry to reverse the increment in the CST as early as August 29, 2019.
“Our request was based on the additional financial burden the increment will have on Ghanaians and the fact that it will lead to exclusion of low income households and communities from ICT networks.
This will most likely result in the neutralization of the strategic utility of mobile connectivity aimed at ensuring improved livelihoods, high incomes and inclusive development.
The TJC Ghana’s call for the reversal of the increment was particularly relevant at that time as it is today since its implementation. Ghana’s continued reliance on consumer-based taxes overburdens the ordinary citizen,” the coalition said.
The Coalition suggested to government to instead consider at other little-tapped sources for additional revenue such as placing a more serious focus on property taxation and further exploring the untapped opportunities in the informal sector.
“The GRA also needs to intensify its efforts at mobilising more direct taxes by pursuing professionals who claim to belong to the informal sector just because they have failed or refused to register their businesses with the relevant authorities including the GRA itself.
“The GRA’s own information shows that even though the informal sector constitutes about 70% of operators in the economy, its contribution to domestic revenue is only about 2%.Here, we also want to see GRA’s plans for a full roll-out of the Integrated Tax Application and Preparation System (ITAPS) digital platform for tax collection,” the coalition noted.
The coalition’s statement argued that taxes such as CST are regressive as they usually impose hardship on the poor and vulnerable groups and communities, as all persons (rich and poor) are charged the same tax relative to the incomes no matter their actual incomes.
“Though the CST is one of the easiest means of collecting revenues by Government, its impact on the poor and further exclusion of them from the opportunities and advantages that access to ICT provides for them to escape poverty, are far more costly to the society than the convenience it affords Government and its revenue agency,” the statement added.
Regarding the upfront deduction of the tax on consumers recharge amounts, the coalition said, it was only fair that customers know how much they are paying.
“After all, VAT receipts display the same information. The Telcos should, therefore, not be portrayed as sabotaging the government,” the statement said.