VAT on Mobile Phones to Distort Mobile Money If… – Economist

Economist, Dr. Ebo Turkson has impressed on government to be cautious with its new taxes on mobile phones as it could distort efforts at driving a cashless economy.

He argues that the move could restrict access to mobile money use which dwells largely on mobile phone ownership.

The Mobile Phone Dealers Association is protesting the imposition of 17.5% VAT on all mobile phones imported into the country.

Though Dr. Turkson admits to the potential boom in the mobile money business which will warrant the imposition of taxes, he however suggests that the move could equally impede greatly, the financial inclusion drive if not properly managed.

“What we should be very mindful of is that mobile money is very important for the economy because we are able to raise a lot of resources out of that; otherwise people would have been keeping the monies in their wallets or elsewhere.”

“But if they are storing money on their phones, the resources are available for us to dwell on them. So in as much as the sector is booming, it becomes an attractive sector for government to pose taxes and get revenue, it must be careful it does not unnecessarily make the services that are provided within that sector too expensive,” he cautioned.

The Mobile Phone Dealers’ Association has heavily resisted the tax.

The group argues that the move will affect their profit margins and eventually kick majority of them out of business.

But after a meeting with the Finance Minister over their concerns, the traders say they are anticipating a possible reversal of the plan.

Mr. Osei Agyemang is a co-Chairman of the Mobile Phone and Accessories Dealers Association said,

“We have given the Finance Minister two documents. He says he is going to look through it and see what went wrong so I am hopeful”.

The CEO of the Institute of Certified Economists Ghana, Gideon Amissah has urged government to consider new ways of generating revenue since the imposition of high taxes will be counterproductive.

“Though we were given some assurance the economy will be built on production or productivity, it appears that currently government is relying on taxation to mobilise revenue. However, we don’t think that going forward, we would have to be depending so much on taxation to expand revenue because they would appear as if they are trying to lift up ”

Meanwhile the traders are hopeful of a possible withdrawal of the tax after deliberations with the Finance Ministry, on Monday, March 19, 2018.

Source: Citibusinessnews