By McPherse Thompson, Assistant News EditorJAMAICA'S TWO major cellular telephone providers, Cable & Wireless and Digicel, say they have no control over the inflated resale price of prepaid calling cards being peddled across the island by hundreds of unregistered taxpaying micro-enterprises.
The companies said their guideline is that the final cost to their customers should be the face value of the cards plus General Consumption Tax (GCT) of 20 per cent.
Checks by Wednesday Business revealed, however, that in many cases, consumers were told the taxable portion of prepaid calling cards to now ranges between 25 and 30 per cent, when they were buying cards. This was said to be because the Government had increased the tax on telephone calls just over two months ago.
But Clive Nicholas, director-general of Tax Administation, said any sum collected by vendors over the requisite 20 per cent should be deemed a profit margin rather than a tax.
Digicel's marketing manager, Harry Smith, said the company was continuously widening its distribution network as part of the effort to ensure availability of its telephone cards, as well as ensuring that its customers did not have to pay over and above the face value plus GCT.
"We would never be happy with anybody who sells our products at more than the face value plus GCT," said Mr. Smith, responding to Wednesday Business queries as to whether vendors were free to sell at whatever price they wished. "Those we find in breach we will stop supplying with cards for resale," he added.
Digicel sells its prepaid calling cards through Facey Commodity in Kingston, which in turn circulates the product through 13 sub-distributors islandwide, which then sell to numerous outlets, including supermarkets, petroleum service stations, pharmacies, wholesale establishments and other businesses.
In April, Finance and Planning Minister, Dr. Omar Davies, announced an increase in GCT on telephone calls from 15 per cent to 20 per cent as part an expansion in the tax base. At the time, Dr. Davies suggested that the increase should not unduly burden telephone users because in the case of prepaid calling cards, many consumers were already paying the 20 per cent tax.
However, it emerged that charges above the taxable amounts were mainly being charged by micro-businesses such as grocery stores and street vendors, who are unregistered under the GCT Act and would therefore be prohibited from collecting the tax. Furthermore, some of those micro business people contend that when they source prepaid calling cards from some of the larger distributors, they are made to pay for the full face value of the cards in addition to the tax at that point and, therefore, they have to add an extra sum to ensure they make a profit.
Cable & Wireless Jamaica's (C&WJ) public relations manager, Errol Miller, said that company's guideline was also that distributors and retail vendors charge its prepaid calling cards customers for the face value plus GCT. He also said retail vendors usually buy in bulk, get the cards at discounted prices and hence there was an incentive to resell the products. C&WJ already has a wide distribution network islandwide, but it too was seeking to expand those outlets.
And both telecommunications carriers are now engaged in a price war as C&WJ slashes its mobile rates to $3.95 per minute in a promotional campaign that began yesterday and is expected to continue until September 1, while Digicel introduced an all July promotion of $3 per minute, with seven free minutes for calls made between its telephones.
