Telecom prices to increase if excise tax levied

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The price of telecom services might be increased soon if the draft amendment of excise tax proclamation levied tax on the sector, however the government argued that the upcoming opening up of the telecom industry will reduce the price.
The draft proclamation that is the most discussed topic for the last couple of weeks has been tabled to the parliament has included several changes compared with the 2002 proclamation and amended in 2008.
The draft document revised percentiles of most of the commodities and services and also added some new items on the list.
One of the newly added items is the telecom services that include mobile service (voice, data and short message), landline and wireless internet service and telecom services.
In the latest public hearing held on Wednesday January 1, at the parliament representative from Ethio Telecom, the state owned monopoly, opposed the five percent excise levy on the telecom sector.
The representative said that the rate is very huge. “We suggest to be imposed at least in a progressive manner than imposing such kind of levy at a time,” he added.
Observers on the sector said that the new excise levy shall increase the tariff of the telecom service. They said if the government apply a new tax on the sector besides the existing direct and indirect taxes, the service charge will increase significantly.
The draft excise on telecom service does not include the landline voice service.
Eyob Tekalgne, State Minister of Finance, rejects the argument that the price of the telecom service will increase. He looks the case the other way round. He argued that the telecom sector will be opened for competition and that will push the tariff to drop. “The companies will compete on the sector that will eventually reduce the rate,” he told Capital.
Currently the sector is monopolized, while the government announced by March 2020 two more companies will be selected to play on the sector. At the same time the minority share on the Ethio Telecom will be also privatized in the current budget year.
A year ago the telecom provider introduced massive tariff reduction on its services.