The Inquirer is a leading independent daily newspaper published in Liberia, based in Monrovia. It is privately owned with a "good reputation".

Taking A Note Of The Issue Between The GSM Companies And LTA

By Atty philip N. Wesseh (PNW)

There is no gainsaying that every government depends on the imposition of taxes in whichever form or manner or under whatever nomenclature, for its smooth running. This function is delegated to some of the functions of the government that have statutory oversight functions on some institutions and businesses.

One of such is the Liberian Telecommunications Agency (LTA), which is the regulatory government’s institution for GSM companies like Lonestar and Orange. The issue of the imposition of tax or surcharge came to the center stage in recent time when, as there was public outcry when the two GSM companies effected a change in prices and services based on a sub charge imposed by LTA.

The matter was challenged in court, but the two institutions did not prevail, thus causing the two companies to effect the changes in prices, something that was rejected by the LTA, for which it immediately ordered the companies to return to “status quo ante,” meaning they should return to the previous prices, instead of enforcing the new ones.

But let me make it emphatically clear that this piece is not intended to delve into the controversy between the LTA and the GSM Companies regarding the imposition of sub charges by the LTA on the companies, a matter that even went to the Supreme Court.

Again, this is not about the merit or demerit of the matter, but to join the discussion about the imposition of taxes. This piece is not a matter of “picking or choosing,” as we say in Liberia or to pass judgment as to who is right or wrong .It is mainly for intellectual purpose, as I reflect on some of my class discussions in economics, which I did as my minor at the University of Liberia.

Today, I am inspired to look at this issue about the imposition of tax or taxes and its consequences. Undisputedly, the imposition of taxes is the fiscal tools used by government to generate needed revenue or funds for its operation. But in doing so, there are fundamental questions, as to whatever kind of tax being imposed.

This is where the issue of “TAX INCIDENCE” comes about, especially as it relates to businesses and the fundamental question; WHO BEARS IT? In economics, “tax incidence or tax burden is the effect of a particular tax on the distribution of economic welfare. … Tax incidence is said to “fall” upon the group that ultimately bears the burden of, or ultimately suffers a loss from, the tax.”

For surcharge, it is defined as “an extra fee, charge, or tax that is added on to the cost of a good or service, beyond the initially quoted price. Often, a surcharge is added to an existing tax and is not included in the stated price of the good or service.”
Every time a tax, in whatever form or manner, is imposed on a business or businesses, there is always the likelihood or tendency that the business may share it with the consumers or pass an inordinate percentage or all to the consumers.

Business, as it is known, is about “profit maximization.” That is, they would not want to bear all of the tax or taxes in whatever name imposed on them to avoid affecting their profit-margin.
This is why care is always taken or study is done to create a balance. That is, the interest of the government and that of its people, as well as the businesses to continue to operate on the market.

Coincidentally, just as I was about to end this piece I heard Vice President Jewel Howard-Taylor expressing concern over the matter, especially as it relates to the increment in prices for the use of the GSM services by the ordinary people. She frowned on any attempt to increase hardship already being faced by the people.

In an interview with LBS youthful Daniel Ankray yesterday also relayed by Truth FM, Madam Taylor, who is receiving treatment in Ghana for CONVID-19, pointed out that there are other means by which government can generate revenue, naming agriculture and tourism, as two of the areas by which the government can generate revenue.

Furthermore, she inferred that the use of these services is not a luxury and so to effect any imposition of tax in whatever form and manner on the GSM companies that are serving the common people, would be unhealthy, as it would bring about difficulties in communication which is vital to everyone.

The Vice President talked on other issues, but, as we say in law, they are of no relevance to the issue at bar, therefore, I would not incorporate them in this piece.

But what I can say about this issue of imposition often, on businesses that serve the people, but consideration should be given to the issue of “tax incidence,” which bears the fundamental question of who bears the burden of the tax imposed on businesses, like the GSM companies. Howbeit, I am happy that the companies and the LTA are belatedly in serious discussion on the matter.

I use the word ‘belated’ because this was what should have been done many months ago. Equally, I am unhappy over hypocrisy being played in this matter by some individuals, including government officials who seem to suggest that they are not aware of this rigmarole between the LTA and the companies. This is unfortunate, and a high level of deceit.

This issue between the LTA and the companies is not a matter of today. Even after the court’s ruling, it was clear that the prices of these services would be increased as a result of the sub charge which the companies rejected because of its consequences on the ordinary people. And so today, to hear even some officials of government suggesting that this issue is outlandish to them, is unfair and shows a lack of sensitivity on issues that concern the plight of the people.

Once again, this piece is not intended to say who is right or wrong, but to say that whenever a tax, in whatever form or manner is imposed on businesses, there is always a tendency that the businesses may share it or pass it on to the consumers.

Hence, let authorities be careful when it comes to imposing taxes or surcharges.

I Rest My Case.

Leave A Reply

Your email address will not be published.