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THE suggestion by the Minority in parliament that government plans to tax mobile money has provoked debate as to whether it is prudent to effect the tax or not.

Telecom companies charge users one per cent for mobile money transfer services, which, they say, is a standard rate for defraying service costs.

GH¢109bn transactions in 9 months of 2017
According to data from the Bank of Ghana (BoG), the total value of mobile money transactions by users of the service hit GH¢109 billion at the end of September, this year.

GH¢1bn derived from charges in 9 months
Per the one per cent transaction cost charged customers, it means the telcos derived a whopping GH¢1 billion over the nine-month period.

Less than GH¢100m as interest
Interest paid to holders of electronic money wallets for the nine months is less than GH¢100 million.
GH¢900m of charges remained with telcos
This means the telecom companies kept over GH¢900 million of the transaction cost paid by subscribers.
GH¢78.5bn transactions in 2016
According to the Payment Systems Oversight Report published by BoG, the value of mobile money transactions as of December 2016 reached GH¢78.5 billion.

GH¢780m derived from charges in 2016
One per cent paid as transaction cost on this amount translates into GH¢780 million for telecom companies.

GH¢24.79m paid as interest to subscribers
The report revealed that the total interest paid to holders of electronic money wallets in 2016 was GH¢24.79 million.
GH¢755.21m remained with telcos in 2016
This means the telecom companies kept GH¢755.21 million of all the charges paid by mobile money subscribers.
Taxing emerging economic sectors
Some industry watchers says it is part of the fiscal management responsibility of government to tax new and emerging sectors of the economy, such as mobile money.
Social inclusion
However, the mobile money subsector provides the ordinary people of Ghana socio-economic inclusion.
Nuisance tax?
According to these analysts, mobile money, which is also being regulated by BoG, is a financial service so if the previous financial service tax was a nuisance, then tax on mobile money is an upgraded nuisance against ordinary people.
0.5% tax can fetch govt GH¢500m a year
In the event that government decides to impose 0.5% tax on transaction charges to be paid from the one per cent charged by the telecom companies, government would make close to GH¢500 million a year.
Fears the tax may be transferred to subscribers
The fear is that the telecom companies are likely to transfer the tax to subscribers, which will mean that the transaction cost will now increase to 1.5% of total amount involved.

Some subscribers complain about transaction cost
Some subscribers have raised issues about the one per cent service charge for mobile money transfer services, describing it as substantially high.

They cite other comparable bank services which are for free or attract fixed charges of lower amounts.
Telecom companies defend transaction cost
But telecom companies providing the service argue that the one per cent is standard industry practice across all the mobile money platforms in other parts of the continent.

The first and most important is the distribution network of agents because these agents need to be incentivised to be able to continue the service.

They argue that even before the one per cent is charged the customer, just by the fact that the customer must put money in their wallet, the agent makes a commission to motivate the agent to keep money in their wallet.

From that premise, the agent is also expected to earn money any time the transactions are performed.

The telecom companies said when customers register, it is free, and there are agents who facilitate this, and they have to be paid.

There are also suggestions that both the sender and recipient of any mobile cash transaction are each charged one per cent, resulting in a double charge of two per cent in total.
The figures highlight the mobile money platform’s importance and its impact on financial inclusion in Ghana, and how it can facilitate progress toward a cash-lite economy.

National Fiscal Stabilisation Levy
While the discussion on mobile money tax rages on, MTN is urging the government not to extend the “nuisance” National Fiscal Stabilisation Levy (NFSL) in the 2018 Budget.

The five per cent NFSL, payable quarterly, was introduced in 2009 but was abolished in January 2012.

It was reintroduced on September 30, 2013 by ACT 862, and subsequently amended to end in December 2017.

It was imposed on banks (excluding rural and community banks)
Non-Bank Financial Institutions, insurance companies, telecommunications companies liable to collect and pay the Communications Service Tax, breweries, inspection and valuation companies, companies providing mining support services, shipping lines, as well as maritime and airport terminals.

In the telecommunications industry, MTN Ghana is the only operator which pays the levy since the other telcos do not make or declare any profit.

MTN has disclosed that between 2013 and now, it has paid a total of GH¢134,081,000, and it projects an additional GH¢49.855 million for this year, to bring the total amount to GH¢159 million.