The Ghana Chamber of Telecommunications has added its voice to the call on government to scrap the National Fiscal Stabilization Levy from the 2018 budget to be read Wednesday, November 15, 2017.
MTN Ghana, the only telco that pays the level now, made the call earlier, saying that not only has the tax outlived its purpose, by law, but is also hurting MTN and other businesses which pay it.
The five per cent levy was introduced in 2013 and was supposed to last for only 18 months ending in the middle of 2015, but it is still around.
It was imposed on the profits of particular companies, including telcos, to help government stabilize the economy.
But the time is past and government is still taking the taxes from those companies.
Till date, MTN Ghana, for instance, has paid almost GHC135 million and the company says it is now hurting its investments so government must remove the tax now.
Chief Executive Officer of Telecoms Chamber, Ken Ashigbey said there is need to scrap the NFSL because its continuous stay on the book is not consistent with government’s own mantra of removing all “nuisance” taxes.
He said the levy is obviously taking a hard toll on telcos and other business, which are already burdened with several other taxes.
“We have seen a major consolidation in the telecoms industry between Tigo and Airtel and that should tell you that individual telcos are finding the market challenging so they need to join forces to continue serving the country,” he observed.
He noted that the telecoms industry provides over 1.5 million direct jobs and also forms the basis of several businesses that provide many more jobs, adding that tax reliefs for the industry only goes a long way to drive growth for the economy.
Indeed, MTN itself has said that resources freed from the scrapping of the NFSL would be reinvested in expanding services to unserved and underserved areas, as well as undertaking CSR activities in deprived areas.
Ken Ashigbey also noted that there have been rumors that government wants to place a tax on mobile money but that would not be consistent with government scrapping of taxes on financial services.
He said mobile money is a financial service so he does not expect government to tax it, adding that government can rather use mobile money to draw more people into the tax net and to collect taxes easily.
“As government embarks on a drive to widen the tax net, the mobile money platform presents an opportunity for government to easily formalize the financial sector and be able to easily track incomes in the informal sector and tax them appropriately.
“Even the mobile money platforms itself can be used to collect taxes directly by making it easy for people to pay taxes via mobile money,” he said.
The Telecoms Chamber CEO also welcomed news that government intends to reduce electricity tariffs for industries, saying that power cost forms a significant part of telcos cost of operations and a reduction would go a long way to help telcos to do more.
He is hopeful that the coming budget will give businesses room to expand and provide more jobs.