The Federal Government’s decision to raise the overall consumption tax on telecom services to 12.5% is illtimed, according to the National Association of Telecoms Subscribers, which represents Nigerian telecom users.
The association claims that many Nigerians are already in poverty as a result of the country’s difficult economic situation, and that an additional tax on telecom users will make matters worse given that everyone needs access to telecom services.
At a stakeholders’ forum on the application of excise duty on telecommunications services in Nigeria on Thursday, the Federal Government announced plans to impose a 5% excise duty tax on telecoms services.
At the forum, which was organized by the Nigerian Communications Commission, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, said this
Ahmed, who was represented by the Assistant Chief Officer of the Ministry, Mr Frank Oshanipin, said the five per cent excise duty was in the Finance Act, 2020 but had not been implemented. She said, “Payments are to be made on monthly basis, on or before 21st of every month. “The duty rate was not captured in the Act because it is the responsibility of the President to fix rates on excise duties and he has fixed five per cent for telecommunication services which include GSM. It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to non-oil revenue.
According to them, it was because of COVID that they couldn’t implement it since 2020 but that they want to do it right away. But it will be insensitive for them to implement it now, it is just not right. This means that in bringing in more taxes, they are also increasing the cost of telecom services through the backdoor.
“Already, consumers are paying a 7.5 per cent VAT levy, and the telecom operators at the forum said they were going to directly pass the tax to the subscribers that they are incapable of absorbing any extra fee anymore because of their cost of operations and more.
“The government should be sensitive to the plight of the citizenry, to the plight of the masses, so they do not bring in this very unpopular tax.”
While speaking at the forum, the Chairman, Association of Licensed Telecom Owners of Nigeria, Gbenga Adebayo, revealed that the additional five per cent tax would be a burden on telecom consumers
He said, “It means that subscribers will now pay 12.5 per cent tax on telecom services, we will not be able to subsidise the five per cent excise duty on telecom services.
“This is because of the 39 multiple taxes we already paying coupled with the epileptic power situation as we spend so much on diesel.”
The Executive Secretary, ALTON, Mr Gbolahan Awonuga, added that the five per cent excise duty was unhealthy for the telecoms industry as telecom service providers already pay two per cent of their annual revenue to the NCC.
According to the president, Association of Telecommunications Companies of Nigeria (ATCON), Ikechukwu Nnamani (who was represented by the executive secretary, ATCON, Ajibola Alude at the forum), the five percent excise duty on telecom services could lead to job losses.
The executive vice-chairman, NCC, Umar Danbatta, said the industry has considered a June 1 commencement date for the excise duty.
Recently, telcos proposed a 40 per cent hike in the cost of calls, SMS, and data to the NCC as a result of an unfavourable operating environment.
