The Ghana Chamber of Telecommunications has welcomed the reduction in the Communications Service Tax (CST) but urged government to scrap the tax since “the CST is targeted at sectors that are more productive but vulnerable.”

The chamber welcomed government’s decision to reduce the CST and referred to it as a good measure that would help reduce the cost of telecommunication services for customers in the short term and aid stimulate growth in the longer term.

Chief Executive Officer of the Ghana Chamber of Telecommunications Ing. Kenneth Ashigbey in an interview with this reporter said the reduction would make it easier for businesses to use internet charges to operate effectively and efficiently.

Mr Ashigbey indicated that the reduction of the tax by 5 percentage points would help businesses and resolve in turning the economy around as quickly as possible.

“As businesses function smoothly, it will stir growth because the Internet services are used for businesses and that will help the recovery of the economy”, he stressed.

The CEO of the Ghana Chamber of Telecommunications explained that “if you buy 10cedis for ‘X’ minutes of calls, you will be able to do more than you previously were doing. Meaning, per second charge or megabyte charge or SMS charge; would come down.”

“One of the arguments we have made is that industry-specific tax like the CST distorts the market”. He was hopeful that the reduction would impact positively on consumers and go a long way to reduce their communication costs and overall cost of business.

Frequent changes in rates costly

Meanwhile, Mr Ashigbey expressed worry over the cost implications of the frequent changes in the CST rates.

The introductory rate was 6 per cent, it was increased to 9 per cent and now to 5 per cent.

“Anytime there was a change in percentage figure (be it an increase or a decrease), there was a need for operators to engage their members. Each engagement brought an extra cost to their operations.

“We did an initial engagement that was easier; where it was high yet, in 2019, it was increased to 9 percent and we had to engage members again; it has been decreased; it means we will have to bear another cost to engage our members”, Mr Ashigbey lamented.

To avert the unplanned costs associated with the changes , Mr Ashigbey hoped that the CST would remain at five percent for a longer period or “better still cancelled completely.”

Background of CST

The Communication Service Tax (CST) was introduced in 2008 at a rate of six percent to raise additional revenue from communications services rendered by mobile operators. The tax is levied on charges payable by consumers for the use of communication services.

In 2018, the tax brought in a total of GH¢420 million, representing a 27.7 percent increase from the estimated ¢304 million accumulated in 2017. The rate was increased to 9 percent in 2019. However, during the recent mid-year budget review, government announced a 5 percent decrease which would take place effective September 15, 2020.