New tax leads to call card hoarding in Sierra Leone

A new sales tax has led to confusion about pricing and subsequent shortages of calling cards in Sierra Leone, which has been plagued in the past by uncoordinated increases in rates for mobile phone usage.

Mobile companies hiked the price of calling cards last week, raising protests by consumers and then a rebuke by government officials, who ordered that prices revert to previous rates until legal issues are resolved.

For the past week, most mobile phone users in the country have found it extremely difficult to buy and use call cards. Sparking the problems was an increase in prices: 50 unit cards uniformly sold for 1,700 leones (US$0.51) were increased to Le2,000 while the 100-unit card started selling for Le4,000, from Le3,400.

This development followed the government's newly introduced Goods and Services Tax (GST). Though the GST came to full effect on Jan. 1, phone users did not start feeling its brunt until Jan. 4, when normal business activities started.

"At first, I thought the call cards were hoarded by the GSM companies and their wholesale dealers so that they will be scarce and sold at higher rates where available," says Kevin Kargbo, a 2-SIM phone user who admitted he has not recharged any of his phones for the past five days due to an increase in the price of call cards. "But I later found out it was the GST effect."

According to its implementing body, the National Revenue Authority NRA, the GST is a tax on consumption and expenditure. It is a form of sales tax imposed on the domestic consumption of imported and locally produced goods. It is also imposed on services. It would be paid as a percentage of product value at the time of sales, import, exchange or delivery.

"Last year, they said it was the increase in the dollar rates that mandated GSM companies to add to the prices of call cards," a student, Saleh Morgan-Conteh, said. "Now it is GST. I think if it should continue like this, I'm sure not many people will buy cards regularly. Or some will just forget about using their phones because they can't maintain it," she added.

Many subscribers were disgruntled by the sharp rise in the prices and accused GSM operators of exploitation. Dealers, on the other hand, took to closing their shops for business in order to avoid any form of confrontation in the first few days of the price increase.

"Sales have been bad these days. In fact, we can't even get the cards for sale," a telecenter operator, Amara, said. "The dealers won't sell for us. Even when I went to [GSM provider] Comium's office in the morning (Monday), it was not opened to the public."

The National Telecommunications Commission NATCOM too, kicked against the move by GSM operators saying that under the Telecoms Act 2006, only NATCOM has the statutory mandate to approve tariff increase, "30 days after an operator has notified the Commission in writing" and that "the Commission should determine such modification whether justified by taxation or not" in approving the increase.

"Without prejudice to the GST," NATCOM stated in the release issued last Tuesday to inform the public not to yield to any form of increase, "GSM operators should follow the proper procedure," for a possible increase.

On Thursday, after Information and Communication Minister Alhaji Ibrahim Kargbo conveyed a meeting at his office conference hall with representatives of the telcos, he announced that the prices of call cards would remain the same as before the hikes, since there had not been any contrary arrangement between his ministry, NATCOM and the providers.

"Prices of recharge cards remain the same until the Commission, in collaboration with the information ministry, determines otherwise with the provisions of the Telecoms Act 2006 as amended," he said.

However, despite the warning to revert to the usual price, with Comium also informing its subscribers via SMS on Thursday that prices would remain the same, some dealers are still selling these cards at the increased rates.