Several dealers in mobile handsets and accessories in the Ghana Tuesday closed down their shops indefinitely across the country in protest of the 20 per cent import tax on mobile handsets and accessories.
The phone dealers, who have constituted themselves into the Concerned Phone and Accessories Dealers of Ghana (CPADG), told journalists at a press conference their shops would remain closed until government sits with them and agrees to wave the import tax.
The erstwhile NPP government replaced import tax on handsets with the Communication Service Tax (CST), otherwise known talk tax, to make Ghanaians pay for talking on mobile phone rather than buying handsets at an expensive rate.
The removal of the import tax on handsets led to the influx of lots of affordable, and sometimes fake and cheap handsets unto the market, making it possible for almost every adult and adolescent to afford their own mobile handset. This is arguably responsible for the over 100% mobile penetration in the country right now.
But the current government recently placed taxes and levies on several sectors and items, and that included the return of the import tax on handsets and accessories, not to replace talk tax but to add on to it.
Chairman of the phone dealers group and CEO of Agyengo Phones, Joseph Osei Agyeman told ADOMBUSINESS the 20% import tax on phones and accessories would in the long run collapse the handset industry and deny government of the revenue they are seeking to raise.
He explained that the tax would encourage smuggling and that would eventually drive lots of the phone dealers out of the handset business into other businesses, and also cut the employment the sector provides for several Ghanaian youth.
“It will definitely increase the prices of phones and that will bring back the snatching of phones because lots of people will not be able to afford phones,” he said.
Indeed, the National Communication Authority (NCA) recently started a campaign to push Nokia and Huawei to import affordable smartphones into the country to enable more Ghanaians own smartphones and consume data. Apple is also on an affordability campaign in emerging markets, including Ghana. This 20% tax is arguably a disincentive to those campaigns.
Government had argued that the 20% import tax was meant to protect the local handset industry. But there is only one local handset company, RLG Communications, which, the phone dealers said, imports parts from China and assembles in Ghana, so it is not a handset manufacturer as has been erroneously communicated to the public.
Joseph Osei Agyeman is therefore calling on the government to scrap the 20% tax because it is a threat to the industry in favour of one local assembling company, saying that the phone manufacturers like Nokia, LG, Samsung, Apple, Alcatel and many others, which supply the dealers are threatening to leave Ghana and use other ports in the sub-region to bring in their handsets.
A popular phone dealer and CEO of Freddie’s Corner, Alfred Korlie Matey also told ADOMBUSINESS this is not the first time government had implemented import tax on mobile handsets, but the first time round it did not work because it boosted smuggling and collapsed lots of businesses.
“What is the guarantee that this time round it will work?” he asked, saying that “it will only create the opportunity for people to smuggle in phones and that would mean the major phone companies like Nokia, Samsung and the rest will lose and the government will also not get its tax revenue even though the phones will be on the market.”
He said the previous government under President John Agyekum Kufuor saw the wisdom in waving the import tax on handsets and replacing it with talk tax because talk tax was easier to charge.
“We are not against government raising revenue but this tax will only collapse this industry and government might be forced to support this industry just like a previous government collapsed the music industry and now government is forced to support that industry with a token,” he said.
Meanwhile, information reaching ADOMBUSINESS indicated TECNO Ghana is fast tracking its moves to establish an assembling plant in Ghana, while Huawei has also indicated it is considering putting up an assembling plant in Ghana to avoid the 20% tax.
The major phone companies like Nokia, Samsung and the rest are however vehemently opposed to the tax and are threatening to leave the country, while others have said they will increase the prices of their handsets and that would continue to deny many Ghanaians access to smartphones