Calling Ghana from the UK has become more expensive than calling Nigeria because of the imposition of tax on inbound international calls, according to a paper by two UK organizations.
The imposition of the tax has also led to a drop on the number of calls that were being made from the UK to Ghana before the tax regime, the paper says.
The paper by Delloite and GSMA has found that the imposition of Surtax on International Inbound Call Termination (SIIT) or calls from abroad into Ghana has made calls from the UK to Ghana 200 percent more expensive than calls from the UK to Nigeria.
“This price increase is being reflected in retail prices for consumers. Evidence from retail international tariffs suggests that the average price per minute to African countries that have implemented a SIIT is 28 percent higher than those countries that have not introduced one,” the paper published in September 2014 says.
“For example, the cost of calling Ghana from the UK is now 200 percent higher than the cost of calling Nigeria,” it adds.
The paper notes that the difference in average price per minute between those that have implemented a SIIT and countries at a similar level of economic development is similar to the average price increase due to the SIIT, and over the last five years, 15 African countries have imposed a new additional telecommunication specific tax, in the form of SIIT.
The study looked at the effects of SIIT in six of the 15 countries and on regional integration and it was based on data received from mobile operators.
Indicating that data was not available for the Central African Republic (“CAR”), Republic of Congo, Gambia, Guinea, Chad, Niger, Malawi and Rwanda, the paper notes that aggregated figures for Benin, the Democratic Republic of Congo (“DRC”), Gabon, Ghana, Tanzania, and Uganda (referred to as the ‘SIIT countries’) were used.
The SIIT the paper says, takes the form of an imposed fixed price that operators must charge for international inbound termination, of which the government takes a set amount.
“SIIT prices are different from the competitive market prices for termination which applied before the tax was introduced. In the countries where it is imposed, the SIIT has caused the price of terminating International Incoming Calls (“IICs”) to increase by an average 97 percent, with an increase of up to 247 percent in Burundi,” it says.
According to the publication, this price increase is being reflected in retail prices for consumers.
The publication also found that call volumes in Ghana fell by 27 percent in the five months after the SIIT was introduced, while in Benin, call volumes fell by 1.6 percent during the year following the introduction of the SIIT, whereas they grew by 38 percent in the year before it was introduced.
In Gabon, call volumes fell by 57 percent in the month the SIIT was introduced and in Uganda, the volume of calls began falling after being stable for the previous four years. Whereas in Tanzania, call volumes fell by 16 percent in the month the tax was introduced and 12 percent in the following month.
The paper also argues that the price increases will have an indirect effect by inducing the substitution of standard calls with VoIP calls; and by encouraging the development of illegal SIM boxes used to terminate international and also domestic calls.
“Although call substitution may mitigate some of the wider economic impacts, the SIIT results in significant losses for mobile operators and governments through reduced revenues and corporate tax receipts respectively,” it adds.
By Emmanuel K. Dogbevi