Pay As You Go Taxes on Airtime

Beginning next year, Government will abolish import duty and VAT on all mobile phones imported into the country. Instead, Government plans to tax every minute of airtime a mobile phone user spends on calls made. "Government has decided to abolish import duty and import VAT on all mobile phones imported into the country and introduced a more effective means of taxing mobile phone usage.

Consequently, Government proposes to impose a specific excise duty per minute of airtime use,” Finance Minister Kwadwo Baah-Wiredu announced in his 2008 budget presentation to Parliament yesterday.

Dubbed “Brighter Future Budget” by Government and dubbed “Ye wuo-oh!” (We're dead!) budget by the Opposition, the Minister's proposal is part of plans to raise a whopping amount of GH¢7.1 billion for government business next year. But Ranking Member on Finance, Benjamin Kumbour would have no taxes levied on airtime calls and promises to resist its implementation.

“The excise duty imposed on airtime will simply make it impossible for people to have fair access to the mobile telecommunication technology. This is retrogression on our international commitment than a bright future as it was and we will fight it from the beginning to the end,” he gave notice.

“Government should let the price of mobile phones remain the way it is and find ways of dealing with the problem of tax evasion on mobile phones. It should find an alternative approach to help it monitor and collect tax on imported mobile phones rather than imposing tax on the general population. This is a regrettable policy initiative and must be stopped,” Dr Kunbuor stressed.

According to Kwadwo Baah-Wiredu, who is also the Asante Akyem North MP, a massive infusion of capital is required to undertake the necessary infrastructure development for growth programmes. But, he’s optimistic, projecting another record real economic growth of at least 7 percent.

“The discovery of oil in commercial quantities could therefore not have come at a more opportune time,” he said. “A technical team has been constituted to undertake the necessary analysis of the impact of the oil discovery on the economy in the long term.”

Additionally, he said, Government will set up a taskforce to prepare a master plan for the emerging oil industry. “The taskforce will examine the social and economic implications of Ghana becoming an oil-producing country. The taskforce will in 2008 present proposals that will among others, ensure that oil revenues will be used for economic diversification for the benefit of all Ghanaians, and to minimize the potential social and economic dislocations associated with oil wealth.”

The taskforce, according to the Minister, will identify the requisite legal and regulatory framework, as well as the infrastructure and human resource needs of the oil sector.

On agriculture, the Finance Minister said Government will introduce measures to address the decreasing flow of credit to the agriculture sector. Among the interventions will be the introduction of tax incentives to financial institutions to increase the flow of credit and reduce interest rates on agricultural loans to the range of 5% to 10% and lengthen the maturities of term loans to between five years and more.

Another intervention is the establishment of an agricultural investment fund to be known as the farm credit Corporation with 100% focus on agriculture to provide a range of financial services such as working capital and term loans, insurance and leasing to farmers.

Mr Baah-Wiredu said cocoa is expected to contribute to increases export earnings and to perform above 600,000 metric tonnes for the 2007/2008 season.

“ It is interesting to note that since 2003/2004 when cocoa posted a remarkable output of about 736,000.0 metric tonnes, output has not fallen below 600,000.0 metric tonnes, implying that such record output are sustainable”, he said.

“I knew from the past two weeks that the Finance Minister was going to put together the unfulfilled promises of his government and try to con Ghanaians into believing that projects that have three years completion time could be implemented in one year”, Dr Kunbuor added.