7
Menu
News

FACTCHECK: Communication Service Tax was not increased under Mahama’s government

John Mahama1313121221 Former president, John Dramani Mahama

Sun, 22 May 2022 Source: ghana.dubawa.org

Claim:

A Deputy National Director of Communications for the New Patriotic Party, Jennifer Queen, says that the Communication Service Tax was increased to 15% during the erstwhile National Democratic Congress government between 2008-2016.

Verdict: FALSE

The tax was introduced in 2008 at a rate of 6%. This rate was maintained until 2019 when the government increased it to 9%. The rate was subsequently reduced to 5% in 2020.

Full Text

A Deputy National Director of Communications for the New Patriotic Party, Jennifer Queen, has claimed that the Communication Service Tax (CST) rate was increased to 15% when the National Democratic Congress won the 2008 elections.

According to her, the NDC increased the CST, also known as the talk tax, despite promising Ghanaians that it would be abolished.

Jennifer Queen was speaking on Kumasi-based Hello FM and her statement can be found in a video uploaded on Youtube (between minutes 1:55 to 2:50)

“During their tenure, that is 2008, when we were introducing the talk tax, that was 3%. But they promised to abolish this tax in 2009 when they won the 2008 election. When they came to power, they rather moved it from 3% to 15%. Even if we assume that it was increased to 9%, they did not abolish the tax,” she said as transcribed from the Akan language, Queen observed.



Verification

The Communication Service Tax (CST) is one levied for the use of communications services that are provided by electronic communications service providers.

The tax was imposed under Section 1 of the Communications Service Tax Act 2008, (Act 754).

In Act 754, the CST rate was pegged at 6%.

During the implementation of the CST Act, some issues were raised by telecommunication companies on the clarity of the law in respect of the application of the tax to interconnection services.

Subsequently, an Act to amend the CST Act, 2008 (Act 754) was passed by Parliament and accented by the then President, John Mahama in 2013.

In the Amendment Act 2013 (Act 864), the Finance Minister at the time, Seth Terpker, indicated that the amendment was to “clarify the scope and coverage of the tax and to explicitly include interconnection services within the tax base.” (Page 11 of the Amendment Bill)

Despite the changes in the Act, the 6% rate was maintained even though the scope changed.

This was the case until 2019 when the Finance Minister, Ken Ofori-Atta, proposed an increment in the rate.

In his 2019 mid-year budget (page 28), the Minister said:

“The Communication Service Tax (CST) was introduced in 2008 at an ad valorem rate of six per cent…Government proposes to increase the tax to nine percent to develop the foundation for the creation of a viable technology ecosystem in the country.”

This proposal was approved following the passage of the Communications Service Tax (Amendment) Act, 2019 (Act 998).

The following year, President Nana Addo Dankwa Akufo-Addo, announced in his COVID-19 update 14 a downward review of the CST rate – from 9% to 5%.

He explained that the move was part of the government’s efforts to mitigate the hardships caused by the pandemic.

The reduction of the CST rate from 9% to 5% is in the Communications Service Tax (Amendment) Act, 2020 (Act 1025) which has been passed.

This took effect on 15th September, 2020.

Conclusion

It is not true that the Communication Service Tax rate was increased by the National Democratic Congress after they won the 2008 elections. The 6% rate at which it was introduced in 2008 was maintained until 2019. The 2013 amendment of the Act only affected people liable to pay and some other activities but this did not include a revision of the rate.

Source: ghana.dubawa.org
Related Articles: