3-Day ‘Free Calls’ in Danger

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The House of Representatives has discussed and passed the proposed Tax Amendment Act of 2016, which increased taxes on the 3-day ‘free calls’ scheme provided by GSM companies, alcoholic beverages, hotel, gambling and restaurant services, pending the Senate’s concurrence.

At the Extraordinary Session of the 53rd Legislature yesterday, some of the lawmakers argued that the US$0.01 (one U.S. cent) charged per minute on all calls was not in the interest of the people of Liberia, which led them to vote 32 for, 21 against and 5 abstaining from the process.

The Lawmakers against the one cent increment on every call said the intention of those in its favor was to raise funds for the upcoming 2017 presidential and representative elections, and not to generate tax or revenue as claimed by the House Joint Committee in their report to plenary.

Prince K. Moye, chairman of a special Joint Committee on Ways, Means, Finance and Development Planning and the Committee Judiciary, said during the hearings, the committee observed that the proposed amendment is in the interest of the state except that certain portions of the act were not “holistic and needed some corrections for plenary’s action.”

Rep. Moye said the Ministry of Finance and Development Planning (MFDP) and tax experts argued that the Government of Liberia is not collecting the expected revenues from the communication industry; and as such, the one U.S. cent should be charged per minute on every call.

Moye believes that the government will be generating US$12.5 million if the Senate concurs with the House of Representatives, “which is a good direction for the government.”

According to him, during the hearings, Lone Star Cell MTN argued that the penny charged per minute on all calls will not affect the ongoing 3-day/US$1 promotion.

Rep. Moye said the joint committee through the chief clerk invited the MFDP, Liberia Revenue Authority (LRA), tax experts, Monrovia Breweries, all GSM companies operating in the country, stakeholders, civil society and other parties connected to the proposed tax amendment and conducted two separate hearings.

He said an increase in excise tax on alcoholic beverages from 35 percent to 45 percent for both locally produced and imported ones is unfair as it will be at the disadvantage of the local producers.

As for water, Moye said, “The current rate stands at 10 percent and experts are recommending that it should be placed at 35 percent for imported and 2 percent for locally produced.”

“The goods and services tax (GST) on hotel, gambling and restaurant services on alcoholic beverages is presently at 10 percent and 5 percent increment making it 15 percent on all,” according to MFDP, Liberia Revenue Authority and tax experts who attended the hearings.

In the committee report, Moye said it was established that the current rate of non-alcoholic beverages imported excluding water is currently at 10 percent and experts are proposing that it should be placed at 35 percent.

He said the current rate of residential buildings, which stands at 0.083 percent, be placed at 0.25 percent due to the changing economic and market conditions the country was experiencing.

“For land within city or town limits, city or town lots, which currently stand at 2 percent, experts have recommended that it be placed at 3.5 percent,” the report said.

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