Cellphones have become popular gadgets for a wide range of Jamaicans, unifying white- and blue-collar workers, senior citizens and high-schoolers. The Jamaica Computer Society has called for a hike in GCT on mobile talktime. - Ricardo Makyn/Staff Photographer
Correction & Clarifiation
In the story captioned ‘Tax talk more: Call for GCT hike on cellphone time’ published in The Gleaner on Wednesday, May 6, it was incorrectly said that the Jamaica Computer Society was proposing a five per cent increase of the GCT on cell airtime. The correct statement should have read a five cent increase. We regret the error.
The Jamaica Computer Society (JCS) is proposing that Government consider increasing the tax on prepaid and post-paid cellphone talktime by five per cent to compensate for the proposed general consumption tax (GCT) on imported computers, computer parts and accessories.
The current tax on prepaid and post-paid cell talktime services is 20 per cent.
It was expected that Government would have announced an increased levy on cell talktime in addition to the imposition of 20 per cent GCT on telephone instruments during Minister of Finance and the Public Service Audley Shaw's presentation at the start of the Budget Debate two Thursdays ago, but there was no such announcement.
The JCS is arguing that increasing the tax on cell talktime is more equitable and would not introduce a new tax but rather incrementally increase an existing one.
"The mechanism for collection is already in place. Its impact would be broad-based and more equitable, it would be applied at the back-end and not on the economic asset, and it would avoid discouraging ICT adoption and usage," the JCS said.
Tax on computers
It said the imposition of a tax on computers at this time will hurt the growth and development of the small and medium enterprises (SMEs) - the island's main employers - which have become reliant on information and communication technologies (ICT) to increase efficiency.
"Small firms are important for economic progress in many countries and contribute a large portion of jobs to the employment pool. SMEs have increased the competitive intensity of the market and reduced the monopolistic positions of large organisations and encouraged the development of entrepreneurial skills and innovation," the group said.
"If the Government's policy is one aimed at strengthening local businesses, then a tax on ICT equipment is misdirected and will undermine the very same business and SME policies which are aimed at pulling us out of this economic crisis," the JCS added.
Prime Minister Bruce Golding has, however, defended his administration's decision to place GCT on computers, arguing that the majority of computers imported into the island were by large operations, such as commercial banks, that could afford to pay.
Tax specialist at Pricewater-houseCoopers, Eric Crawford, says the argument that computers should not be taxed because of their importance to development does not necessarily hold water, as it could be applied to a number of other good and services which are already in the tax net.
Cell talktime tax
He added that increasing the tax on cell talktime might actually worsen the tax system.
"It will make it more complex and it will be moving away from the principle that the tax should be broad-based and non-discriminatory," he argued.
Another specialist, with KPMG, explained that the move would not necessarily be equitable because the poor spend a significant portion of their income on prepaid phone cards. Therefore, the tax would only create an added burden for those whose resources are already stretched.
According to the specialist, the decision has to be taken, however, based on policy as the Government has to decide whether to tax a service or product which everybody uses or tax something that could impact future development.
gareth.manning@gleanerjm.com