Monday, 7 October 2019

9% CST increase takes effect amidst agitations by citizens

Image result for Ken Ofori-Atta announced an increase in the Communication Service

Adnan Adams Mohammed

Despite many Ghanaians have raised concerns over the upward adjustment of the Communication Service Tax (CST) from October 1 - from 6 percent to 9 percent - affecting all communication services in the country, it makes no difference since the telecom companies have already effected the changes in airtime charges.

This comes after the Finance Minister, Ken Ofori-Atta announced an increase in the Communication Service Tax (CST) during the presentation of the 2019 mid-year budget review to parliament.

The CST was increased from 6% to 9% by the NPP government in June and took effect from October 1, 2019.The Finance Minister’s announcement simply means; Ghanaians will pay more in terms of telecommunication services because the cost of providing data and voice by the companies including Vodafone Ghana, AirtelTigo, and MTN Ghana will go up.

The Chamber of Telecommunications in a statement after the minister made the announcement said: “The CST has been increased from 6% to 9% and would be applied to any recharge purchased by customers.” As it said, the telecom companies are already burdened by numerous taxes.

It is important to note that the service providers were absorbing the CST when it was only 6% but they decided to pass it on to the consumer following the recent increase to 9%.

The Ghana Chamber of Telecommunications in a statement explained the implementation of the new levy, thus: For every GHS1 of recharge purchased, a 9 percent CST fee will be charged leaving GHS0.93 for the purchase of products and services.

This is because the Ghana Revenue Authority takes its percentage within a number of days and won’t wait for a customer to finish their credit.

Below is an illustration of the CST calculation for all the major telecommunication service providers according to the Communications Chamber:

For every GHS1 of recharge, the Value Added Tax (VAT) for Customer Scratch Card value will be at a 12.5 percent which translates to 0.11 pesewas.

National Health Insurance Levy (NHIL) tax rate value will be at 2.5 percent which translates to 0.02 pesewas.

Ghana Education Trust Fund Levy (GETFL) will be at 2.5 percent which translates to 0.02 pesewas.

Communications Service Tax (CST) rate will be at 9 percent which translates to 0.07 pesewas.

The subtotal left for customers to get from their telecommunications services will be at 77.97 percent which translates to 0.78 pesewas.

The statement further revealed that customers of various major telecommunications services providers would be notified by their service providers of the changes when they recharge or use products and services.

MTN Ghana will now charge locally; 0.1103/min (on-net), 0.1365/min (off-net), local SMS rates will charge 0.0473 (on-net), and 0.0578 (off-net) while international call rates will charge 0.1575 per minute.

Vodafone Ghana will charge a 12.5 pesewas tariff on all local calls and browsing.

AirtelTigo will charge a 10.8 pesewas tariff on all local calls and 10.8 pesewas for calls to other networks.