There is mounting fear among users of cellphones as a result of new measures by their Liberia telecommunications Authority (LTA), requesting providers and operators in the industry to pay “five percent” of their “gross annual revenues earned” to government, effective July this year.
The LTA in an Order issued last week, stated that “in order to lower barriers to market entry and to ensure a sustained revenue stream to Government, the fees to be paid by operators and service providers pursuant to the Amended Regulations include a fixed component and a variable performance-based component, the latter of which has been set at five percent of gross annual revenues earned by Operators and Service Providers.
It said that all operators and service providers shall migrate to the new Licensing Regime by or before June 30, 2015. That as an incentive for Operators and/or Service Providers to migrate to the new Licensing Regime by or before June 30, 2015, their current License and associated spectrum/frequency authorizations will be extended by a number of years to increase the validity of each License and authorization to 15 years.
Furthermore, the institution threatened that operators and service providers who migrate to the new Licensing Regime after June 30, 2015, shall not be eligible to increase the validity of their license and associated authorizations and that those whose migration to the new licensing regime occurs after June 30, 2015, shall attract an annual increase of one percent which will be added to the five percent performance-based rate, used to calculate the variable fees due Government.
Meanwhile the LTA, in its order, further threatened that operators and service providers who fail to migrate to the new licensing regime shall, upon expiration of their License, be required to submit a new License application, if they desire to continue operations in Liberia; and shall be subject to a fifteen percent (15%) performance-based rate in calculating the variable fees due Government.
But some users of these services are of the view that any amount imposed on the providers and operators would be passed to the users, indicating that this means that there would be additional cost in receiving services from these companies.
They said that one of the services this country can boast of now is the use of cell phones by Liberians at affordable cost. The users pointed out that this time of economic constraints it is inconceivable that the LTA would want to engage in this to the detriment of the ordinary.
One economist who spoke to this paper plainly pointed that this is simple logic in line with the economic principle of tax incidence in which he said that in such a situation, the provider would not want to bear the cost of such tax on its gross annual revenue earned and would therefore share it or pass it over to the consumers, like cellphone users.
“Whenever a government or its institution intends to impose a tax, it should always consider the consequences on such a tax on the consumers or people because the business people would not always accept to bear the entire blunt of the tax,” he said.
The economist said the government should know that this is a commodity that is in high demand by the ordinary people and therefore any tax to be imposed must be done with care, or else the people could be deprived of such services or substantially bear the cost for such a tax, something he believes the ordinary people cannot afford.
Some users who spoke to this paper said that this latest move by the LTA may take the country back many years ago when this service was not affordable to the ordinary people because of high charges based on the kind of taxes being imposed at the time.
They said that today, when the services are now available and accessible to the ordinary people, it is unthinkable that such a tax is being imposed on the “gross” of these providers and operators.
On the issue that the LTA would take three persons and give two percent of such a gross amount, many are arguing why the institution, as the regulatory arm of the government, would take more than the government.
When contacted on the concerns of users of these services, the LTA promised to get back to this paper on the matter, which up to press time it did not do.