House Votes to Repeal US$0.01 Tax on Voice Calls

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-Law sent to Senate for concurrence

The House of Representatives has voted to nullify the $0.01 per minute tax law on all local voice calls by repealing Section 1165 and amending Section 1021 (b) of the Revenue Code as amended in 2016. House members unanimously repealed the law following a report from a Joint Committee, comprising of the Committees on Judiciary, Post and Telecommunications and the Ways, Means, Finance and Development Planning.

The decision was made on Tuesday, May 16, during the 31st day sitting of the 6th Session of the 53rd Legislature, and the Act was forwarded to the Senate for concurrence.

Taking place just days before the official rebranding event that changes Cellcom’s name to Orange Liberia the vote seems promising for the company. The erstwhile Cellcom (now Orange), one of two dominant mobile telecommunications operators in Liberia, argued against the proposed tax when it was first introduced by President Ellen Johnson Sirleaf last year, while its arch-rival, Lonestar Cell MTN, embraced the tax because, according to Lonestar, the ‘3 days free calls’ promotion initiated by Cellcom was not good for the telecom sector, especially since there was no tax levied on such promotion.

The telecommunications sector thus became polarized over the proposed tax amendment as Cellcom posited that, by the ‘3 days free calls’ promotion, the company was giving the benefit directly to the people, rather than channeling it through government tax revenue.

Rep. Numene Bartekwa, chairman of the Committee on Post and Telecommunications and co-chairman of the Joint Committee, said the committee embarked on numerous consultations at various levels as it examined the draft bill as per the mandate of plenary.

“There were extensive consultations and dialogues soliciting expert views from service providers, consumer advocacy groups, subscribers, etc, with the view of deriving a solution that will both alleviate the sufferings of the people and at the same time not undermine and affect tax revenue,” the report said.

The report further stated, “that a tax policy should encourage growth in the sector, which will enable business turnovers to increase results in more tax revenue and more jobs for Liberians.”

The report also noted “that given the lack of nationwide public communications system like radio, television, etc, and very low internet penetration, especially in the schools, a situation that results in our children depending more on service providers’ promotions to do research and study, which is positively impacting the learning environment, a prudent tax policy would put more emphasis on turnover tax as compared to the imposition of tax on minutes and internet data packages.”

It may be recalled that in September 2016, the Legislature approved a special amendment to the Liberia Revenue Code (LRC) as amended in 2011 to impose $0.01 per minute on phone calls as proposed by President Ellen Johnson Sirleaf to support the 2016/2017 Fiscal Budget.

The special amendment, according to President Sirleaf, is to provide incentives for additional investment in the economy and the direct revenue implication of US$30.1m to support the FY16/17 National Budget.

During last year’s public hearings on the matter, one of the mobile operators, Lonestar Cell MTN, agreed to the $0.01 per minute call on voice calls, while the other, Cellcom GSM, rejected the tax. Lonestar Cell MTN said the ‘3 days free calls’ promotion won’t be abolished and it would bear the cost so that the tax does not affect customers.

Unfortunately, after the imposition of the $0.01 per minute call on voice calls, Lonestar Cell MTN canceled the three-day free call, which prompted public outcry and brought the Legislature into public disrepute.

Lonestar Cell MTN later extended its regrets in an apology to the House of Representatives for a statement of deception, which led to the Legislature to approve the special amendment to the Revenue Code of 2011 which calls for the imposition of one cent (US$0.01) per minute on phone calls.

In its letter to the House of Representatives dated 10 February but read yesterday on the 12th day sitting, Lonestar Cell/MTN wrote: “Lonestar Cell MTN extends its regrets and sincere apology for the misunderstanding, the harm and the statement applied against you and the Honorable Distinguished Members of the House, by the actions of the Deputy Chief Executive Officer of Lonestar Cell MTN.”
The House accepted Lonestar Cell’s apology.

Mr. Babtunde Osho, the Chief Executive Officer (CEO) of Lonesatr Cell MTN, however, wrote: “Mr. Speaker and Honorable Distinguished Members, it must be noted that not capping or limiting the number of minutes in the promotional offer of the “$1.00 for three days,” would expose our business to incalculable tax burden and that would have been a disastrous business proposition.”

 

 

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