Government increases 'talk tax' to 9%

The government has increased the Communication Service Tax to nine per cent from the initial six per cent.

Finance Minister, Ken Ofori-Atta, announced the increment in parliament on Monday, 29 July 2019 when he presented the mid-year budget review statement.

Mr Ofori-Atta told the lawmakers that: “The Communication Service Tax (CST) was introduced in 2008 at an ad valorem rate of six per cent. The tax is levied on charges payable by consumers for the use of communication services.

“Government proposes to increase the tax to nine per cent to develop the foundation for the creation of a viable technology ecosystem in the country.

“This will comprise amongst others putting in systems to identify and combat cybercrime, protect users of information technology and combat money laundering and other financial crimes. The increase will not be earmarked, however, the sharing ratio will be adjusted in such a manner that the national youth employment programmes continue to receive the same proportions as they are currently receiving.”

Mr Ofori-Atta also announced the scrapping of the Luxury Vehicles Levy introduced in 2018 saying the government has considered agitations by the public and various bodies advocating the cancellation of the levy.

He told parliament that “as a listening government, we are proposing to the House, the withdrawal of the levy”.

Mr Ofori-Atta added that the government will continue to improve compliance, expand the tax net and explore other innovative sources of raising the revenue of the country.

Parliament passed the Luxury Vehicle Levy to impose an annual levy on vehicles with high engine capacities effective from Wednesday, 1 August 2018.

The levy was supposed to affect vehicles with engine capacity of two thousand, nine hundred and fifty (2950) Cubic Centimeters and more.

The levy was GHS1000 for vehicles with engine capacity of 2950cc - 3549cc, GHS1,500 for vehicles with engine capacity of 3550cc - 4049cc and GHS2,000 for vehicles with engine capacity of above 4049cc.