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A 20 Percent Tax on Mobile Phones: What is Ghana’s Parliament Thinking?

By Wayan Vota on July 26, 2013

I am not Ghanian. I do not live in Ghana. So maybe I am missing something obvious. But I am very confused as to why Ghana’s Parliament passed a bill to re-impose a 20 percent import duty on mobile telephone handsets.

Mobile Madness

The mobile services industry is a modern day gold mine for the “Gold Coast” – according to the Ghana Chamber of Telecommunications, the mobile services sector has created over 1.5 million jobs in the country and the Ghana Statistical Service, the telecoms industry has been a key driver of economic growth, directly accounting for 7% of investments in Ghana, 10% of government income, and 2% of GDP.

And yet Ghana’s Parliament wants to kill this golden goose by raising prices 20% in a hunt for $50 million in government revenues. This is a good way to curtail the explosion in mobile penetration and the benefits it brings. As Emmanuel Dogbevi and Dode Seidu rightly point out:

The import tax clearly goes against one of the main drivers of mobile subscription growth in Africa: low-cost handsets coupled with pre-paid services have made ownership of mobile phones affordable. […]

The import tax will also affect the communication ability of many Ghanaians. According to the African Mobile Observatory 2011, mobile services have become the primary means of voice communication for many of the inhabitants of Africa as the number of fixed-lines has stagnated or has not increased as mobile phones have. Hence mobile phones are the main communication tool available to many people.

Ghanians, please help me understand what the Parliament is thinking. Why are they so quick to tax such a economic and social cornerstone of Ghana’s development? What is this new tax, besides a naked grab for the wallets of Ghanians by the large taxpayer unit?

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Written by
Wayan Vota co-founded ICTworks and is the Digital Health Director at IntraHealth International. He also co-founded Technology Salon, MERL Tech, ICTforAg, ICT4Djobs, ICT4Drinks, JadedAid, Kurante, OLPC News and a few other things. Opinions expressed here are his own and do not reflect the position of IntraHealth International or other ICTWorks sponsors.
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2 Comments to “A 20 Percent Tax on Mobile Phones: What is Ghana’s Parliament Thinking?”

  1. Ari says:

    Not to mention it likely criminalizes the previously lucrative and respectable business of importing phones. No doubt many will chose to smuggle phones in rather than paying this tax.

  2. Ziggymar says:

    This is a govt that is so inefficient in collecting taxes that, they are resorting to some short-cut to collect taxes. There is not an efficient systems that is being used by the Govt to collect taxes from companies and individuals.

    You should visit the Ghana Revenue Authority (GRA)office to see the type of computer systems that are being used to document, track and collect taxes. It is so inefficient that you will scratch your head and ask whether this is the Ghana that the IMF, World Bank and others have been applauding.

    The e- gov systems do not work, which are compounded by erratic erratic power outage, high cost in Internet and lack of skill sets by the govt employees. Most of their transactions are still conducted manually and they can accurately determine who is not paying what or how much taxes are owed by the company.

    Given the lack of system in place and other corrupt practices by the government, some companies and individuals do not pay taxes. It is difficult for the govt to bring these companies and individuals into the legal taxes system so they can pay their taxes.

    What are the MP’s thinking? I don’t think they understand the importance of technology and it’s impact and a key driver to the economy of the country. Rather building an effective system (technology tools, people, and money) that could be used to collect taxes, they will turn to short- term fixes. This is how the Ghana govt operates — No vision, no long-term planning and no analysis to determine the cost and benefit in pursing this initiative