Telecom industry wants government support to ease tax burden and do more

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Chief Executive of the Ghana Chamber of Telecommunications, Ing. Dr. Kenneth Edem Ashigbey is calling for greater government and regulatory support via policy interventions that eases the tax burden on industry players so they can better serve the public.

Speaking at the 18th Knowledge Forum of the Chamber, Dr. Ashigbey noted that in year 2020 alone, the industry paid a whopping GHC3.6 billion in taxes, which represented 8.5 per cent of GDP for the year, and also indicates a 28 per cent increase in total tax contribution from the industry year-on-year for the past three years.

Per the trends, telecom industry total tax contribution over the last three years indicates a continuous average annual growth of over 28%, from GHS1.74bn in 2017, GHS2.2bn in 2018, and GHC3.2bn in 2019 and now GHS3.6 billion.

The trend also shows that for every GHC100 the industry earn, they pay out GHC48 to the central government and its agencies in the form of taxes borne by service providers, withholding tax collected on behalf of government, charges, levies and fees to government agencies and remittances to government.

Dr. Ashigbey said, in spite of the huge tax bill, the Covid-19 also drove data demand up and compelled the industry to invest some GHC3 billion to improve capacity for consumers, even though there was a strain on investible funds available to industry players.

According to him, in the midst of all that, there was considerable non-profitability across the industry and yet players focused on investing to make service available to consumers.

Dr. Ashigbey believes that given the strain on foreign direct investment and other investible funds to the industry, it has become necessary for government to partner with the industry and find ways of reducing the tax bill so industry players so they can make some savings and reinvest as they have always done.

“We ask for more government partnerships to deliver on our services to customers as well as meet government expectations of the industry because in these partnerships we will find solutions to the greater challenges that affect the industry,” he said.

He noted that huge investment into network improved has for instance boosted data capacity by 130% from 2.2 million TB/day to 3.6million TB/day between March 2020 and March 2021, adding that the traffic is expected to grow to 5 million TB/day in December his year.

The Chamber CEO however believes there is still a lot more that can be done to resolve data capacity gap, but that can only be achieved through partnership between operators and the regulator.

“This would include some policy and regulatory interventions. There is an urgent need to rebalance taxes in the sector to promote digital inclusion, economic growth and fiscal stability because almost every other sector is dependent on our sector now,” he said.

Indeed, the industry players and some industry analysts have always called for the 5 per cent communications service tax (CST), for instance, to be completely scrapped to allow the service providers to make data price affordable for consumers.

Permit fees

Dr. Ken Ashigbey said one of the studies the Chamber would want to carry out before the end of this year is a comparative study of the fees and permits charges on the telecommunication industry in the Ghana compared with that of other African countries to benchmark and also advise on policy to be able to advance digital transformation drive as a country.

According to him, currently, a cursory look at the data show that Ghana is more expensive compared to Uganda, Kenya, Nigeria, Burkina Faso and Niger.

“While most of these countries have a maximum 3 regulators and agencies they have to take permits from before the installation of towers, we have 5 agencies we have to deal with, with the very long lead time.

“We are encouraged that the Ministry of Communications and Digitalization is considering the reviewed telecommunication tower installation guidelines for approval. This should pave the way for a one stop shop for permitting and approval for tower installation,” he said.

Dr. Ken Ashigbey noted that mobile remains the most cost-effective way of extending access to ICT and the internet in Ghana, as well as driving the digitization agenda, adding that it is therefore fundamental to helping government achieve its objectives of expanding ICT infrastructure, meeting last mile goals, connecting the unconnected and positioning the economy as a smart and digital ready market towards further growth.

Mobile Money

For instance, as the main driver of government’s cash-lite society agenda, mobile finance, which is run by industry players, commands over 17.1 million customers, performing more than seven million transactions daily via over 328,ooo registered merchants, and holds a whopping GHC7 billion, which supports the economy greatly because it is money being transacted electronically, so it remains in the bank system to support national develop.

Indeed mobile finance alone paid a significant GHC215 million in taxes last year.

Ecosystem benefits

The Chamber CEO also stated that apart from the mobile sector’s own direct contribution to Ghana’s economic and fiscal stability, and through the contribution of the associated ecosystem of industries, “the sector continues to support and catalyze other sectors such as banking, media, advertising, agriculture, health, education, creative arts as well as facilitating social and familial communication and stability.”

Currently, the sector boasts of some 40 million collected SIM cards, with 28 million of them being data subscriptions: 98% 2G coverage, 90% 3G coverage and 68% 4G coverage. The industry also provides 5,700 direct jobs and an estimated 1.1 million indirect jobs within the ecosystem.

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