Data published by the Bank of Ghana has shown that the unusual spike in use of data during the second quarter – engendered by confirmed cases of the coronavirus pandemic which effectively sent many activities online – resulted in the Communication Service Tax (CST) exceeding its revenue target at end of the period, making it the only tax component to do so.
The Second Quarter Bulletin report indicates that the CST, which was 9 percent at the time but currently down to 6 percent, raked in Ghs 171.4 million of revenue for government – a figure that is 80.5 percent over its expected amount within the period under consideration.
According to the report, the CST’s impressive performance was occasioned by the increased use of data by households and institutions during the lockdown period and after.
It must be remembered that when the first two cases of coronavirus were recorded on March 12, 2020, some institutions – especially international organisations – closed down and resorted to using the Internet to work from home.
Beyond that, when the cases were increasing and spreading rapidly in communities, government imposed a three-week lockdown and other restrictions just to contain spread of the disease.
Following the decision, almost every activity – especially in the formal sector and education sector – was either fully or partially moved online; thereby increasing data usage.
In fact, a report from the telecommunication industry market leader, MTN, indicates that its data traffic in the country surged by as much as 181 percent at end of the second quarter.
Revenue situation
Despite the CST outperforming its target, other sources of revenue continued to perform poorly as, unlike the communication sector which was positively impacted by the pandemic, activities in these sectors continued to experience adverse effects of the virus.
For example, non-tax receipts were lower than the budgeted target of Ghs 2.7 billion by 59.6 percent. Again, taxes from income and property totalled Ghs 5.5 billion compared with the budgeted target of Ghs 6.3 billion.
Personal income taxes also raked-in Ghs 1.9 billion, while company taxes and company tax on oil and non-oil were Ghs 2.3 billion and Ghs 199.8 million respectively.
Other taxes comprising royalties from oil and minerals amounted to Ghs 635.8 million, while revenue realised from Airport Tax and the National Fiscal Stabilisation Levy (NFSL) were Ghs 700,000 and Ghs 123.9 million respectively.
On domestic goods and services, taxes reaped amounted to Ghs 3 billion, which was lower than the programmed target of Ghs 4.5 billion – indicating a 32.6 percent shortfall.
Value Added Tax (VAT) for the period under review missed its programmed target of Ghs 2.4 billion by 25.1 percent, also due to a slowdown in economic activity because of the COVID-19 pandemic.
All these resulted in total revenue and grants missing the target by 30.4 percent, as it recorded Ghs 11 billion out of a programmed Ghs 15.8 billion in the second quarter. The total revenue collected within the period represents just 2.9 percent of GDP against a target of 4.1 percent.
Total revenue comprised tax revenue of Ghs 9.2 billion, representing 83.3 percent of total receipt; non-tax revenue of Ghs 1.1 billion (10.2 percent of total receipt); ESLA proceeds of Ghs 506.6 million (4.6 percent of total receipt) and Grants of Ghs 206 million, 1.9 percent of total receipt.
Meanwhile, total revenue and grants for the year have been revised to Ghs 53.7 billion, representing 13.9 percent of GDP; a 20 percentage points decrease from the original 2020 Budget target of Ghs 67.1 billion (16.9 percent of GDP).
