Gov’t Targets Telecom Companies -Similar to Ruthless Financial Sector Clampdown

The face-off between the Akufo Addo administration and telecommunications service providers in Ghana over the controversial increase in the Telecommunications Service Tax (CST) appear to have escalated as the Minister of Communications have warned of withdrawing the licenses of some operators who may be flouting new directives on the CST tax.

On Monday, the Minister of Communications, Ursula Owusu-Ekuful warned that failure of these companies to halt upfront deduction of the CST from consumers will cause them losing their operating license in Ghana.

“…several sanctions attached to the failure to comply with policy directives issued by the minister in accordance with the electronic communications tribunal including include forfeiture of licence,” she said in Accra during her Meet The Press encounter in Accra on Monday.

“I don’t think we want to go down that route. I am sure they are mindful of the powers that the regulation has in this direction,” the Minister told journalists as she referenced a directive issued to the Director-General of the National Communications Authority (NCA), asking it to enforce the order for telecom companies to cease deducting the 9% CST from consumers upfront.

The government had recently increased the CST from 6% to 9% in what telecom companies described as burdensome. The companies claimed they were absorbing the initial 6% CST but cannot do that with the aggregate raised to 9%.

The companies resorted to deducting a hefty part of recharge credits bought by consumers at source. The consequent public disgust and anger forced the government to do a rethink of how the tax should be deducted.

It is unclear if any of the telecom companies have reversed their on-site deductions. A withdrawal in the license of any of the operating telcos in Ghana could lead to massive disruption in the sector, Whatsup New has gathered.

According to critics, this disruption would be similar in terms of job losses and discomfort to consumers as experienced during the government’s recent financial sector reforms.

In the financial sector reforms, over 7 banks have had their licenses withdrawn, while an excess of 350 financial institutions have been closed down and thousands of workers sent home.

Meanwhile, the former Deputy Minister of Finance in the erstwhile Mahama administration, Cassiel Ato Forson has cautioned the Minister of Communications that she has no authority to direct Telcos on how to treat the Communications Service Tax.

The ranking member on the Finance committee in parliament quoted that the Revenue Administration Act 2009, Act 791 which he says explicitly puts all revenue administration and its management under the purview of the Ghana Revenue Authority (GRA) and therefore the communications minister cannot usurp the powers of the GRA.  “It is unconscionable for the government to increase the CST but insist that telecommunications companies hide the deductions from the consumers. If the government thinks the policy is making it unpopular, it should come to Parliament to repeal the Act,” the legislator opined.