Taxation of mobile phones: Implications for livestock and crop agriculture

Opinion piece written by: Osmond E. Datsomor (Bsc agriculture; Mphil Animal science)

Taxation as a sole means of revenue generation for government funding expenditure must be critically reviewed.

The government of Ghana (GoG) through the Ministry of Finance (MoF) is resorting to impose and subsequently implement a 17% VAT on import of mobile phones, a recent development which is unfortunate. The current VAT on mobile phone imports is 10% thus ECOWAS CET of which importers are struggling to cope with and just yesterday a 17.5% VAT is going to added, summing up to a total VAT of 27.5%. This is large blow to the importer.

Now this exploitation has the potency of derailing the digital transformation of Ghanas economy via mobile phone penetration.

Currently the mobile phone penetration rate is 128% surpassing the 70% predicted by experts (www.theafricareport.com). The imposition of this new 17% tax would be consequently significantly hinder the achievement of the UN Sustainable Development Goals in a range of areas including gender equity, financial service access, health service access, innovation, entrepreneurship and agriculture (livestock and crops) (which is of keen interest) as mobile phones are often the most widespread and inclusive means of accessing internet and digital technologies vital to Ghanas economy and its growth in an increasing linked world.

Implications of 17% VAT or gross 27.5% VAT on livestock/crop agriculture:

On Importers:
I. High import cost of mobile phones
ii. Reduce volume of mobile phone import
iii. High pricing of mobile phones
iv. Alternate illegal source (smuggling)

On Farmers:
i. High cost price of mobile phones
ii. Reduction in mobile phone accessibility
iii. Reduction in farmers purchasing power
iv. Slow adoption of E-farming innovation
vi .Reduction in cashless transaction (Mobile Money)
vi. Reduction in E-agroeducation

On agro E-marketing:
i. High pricing of E-agromarketing services
ii. Reduction in E-agromarketing services
iii. Reduction in digital agriculture service

In conclusion, although this initiative would generate enough revenue to fund GoG expenditure in the short term, it will hinder the digital transformation of livestock-crop agriculture in the long term. And as such, promoting the “hoe and cutlass” agriculture practice of ancient times which contributes marginally to Ghanas GDP which had been declining.

In summary, taxation as the main source of generating revenue by various GOG isn’t the best considering the colossal detrimental effect on the livestock-crop agriculture sector.

Recommendation:
Partial to full waiver needs to be considered for some selected agriculture commodity because the sad undeniable truth is livestock/crop agriculture though is the major employer of the labour force it’s no longer the backbone of the Ghanaians economy hence needs critical aid.

For Correspondence:
Writer: Osmond E. Datsomor (Bsc agriculture; Mphil Animal science)
Contact: datsomorosmond@gmail.com

 


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