Call, data costs to double as FG invokes new telecom tax

Call and data tariffs may increase by as much as 100 percent if a plan by the federal government to hike consumption tax on telecom services scales through.

Daily Trust reports that the federal government had recently disclosed a plan to implement a 5 percent excise duty tax on telecom services, increasing the total consumption tax on telecom services to 12.5 percent.

The new tax regime, according to industry sources, will not only affect subscribers but also add a tax burden on the telcos which would translate into a rise in tariffs.

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If the 5 percent increment is eventually implemented, industry experts say, Nigerians will now be paying as much as N40 per minute call, up from about N20. And data tariffs could also go up to about N2,500 per gigabyte. 

The finance minister, who unveiled the plan at a stakeholders’ forum on the implementation of excise duty on telecommunications services in Nigeria organized by the Nigerian Communications Commission (NCC), said the 5 percent excise duty was in the Finance Act, 2020. 

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She said the accrued taxes would be remitted on monthly basis, on or before the 21st of every month. The move, according to the minister, was part of an effort by the government to boost non-oil revenue in the face of dwindling income, especially from the oil sector. 

The proposal has, however, set the Minister of Finance, Budget and National Planning, Zainab Ahmed, and the Minister of Communication and Digital Economy, Prof Isa Ali Pantami, on a collision course. 

While the Ministry of Finance cites presidential approval to apply the new excise on telecommunication services, as provided by the Finance Act, the Ministry of Communication and Digital Economy is kicking on the ground that the new tax would be harmful to the sector and to subscribers.

 Telecom stakeholders, experts oppose 

Also, Nigerian telecommunication consumers, under the aegis of the National Association of Telecoms Subscribers, have described the move by the federal government to increase the total consumption tax on telecom services, which include GSM to 12.5 percent as “irresponsible and ill-timed”. 

According to the association, Nigerians are already suffering as a result of harsh economic conditions and another tax on telecom subscribers will further impoverish many especially as telecom services are essential to everyone.

President of the Association of Licensed Telecom Operators of Nigeria (ALTON) Gbenga Adebayo, described the excise duty as unusual, saying that it will increase the burden on the telecom operators as they already have 39 other taxes that have been imposed on them. 

Adebayo who spoke virtually at a forum last week stated that his association may not absorb the tax on behalf of the subscribers, noting that they will transfer the burden to the subscribers to pay higher prices for services.  

The Executive Secretary of the Association of Telecommunications Companies of Nigeria (ATCON) Ajibola Olude also kicked against the proposed tax, saying that it does not comply with the principles of taxation which include fairness. 

The implementation of the excise duty according to him will cause job loss; stressing that the proposed excise duty on all telecommunications companies is badly intended, he said.

   Also the President of the National Association of Telecoms Subscribers (NATCOMS), Chief Adeolu Ogunbanjo, lamented that the sector is already heavily taxed with payment made on every recharge card coupled with the existing 7.5 percent VAT.  

According to him, the new excise duty will cumulatively hike the tax to 12.5% including VAT, which will be a huge burden on Nigerians. The move, he said, is “insensitive and unpalatable”.

Ogunbanjo urged the government to reverse its decision to increase the tax in the interest of the people as the telecom industry is the last hope of the common man and should not be destroyed. 

READ ALSO: Pantami Reaffirms FG’s Commitment to Indigenous Telecom Content

A telecom consumer in Lagos, Mr. Lawrence Abi said that the masses may not feel the impact of the excise duty since it’s not an edible commodity.  

He said, “As essential as communication is, how many people know how much they are charged per minute? More so, we have paid a higher amount at the inception of the GSM. So it will not have an effect on goods and services. We also have alternatives to call such as WhatsApp calls. 

“By and large it’s better than additional loans for consumption,” he said. 

However, the Nigerian Communications Commission (NCC) said there was no immediate plan by operators to increase tariffs.  

The Minister for Communications and Digital Economy had, last Monday, expressed dissatisfaction with efforts by the federal government to introduce excise duty on telecommunication services. 

Pantami in his address at the maiden edition of the Nigerian Telecommunications Indigenous Content EXPO (NTICE) themed ‘Stimulating the development of Indigenous Content through innovation and commercialization’ held in Lagos stressed the need for government and stakeholders to continue to support the sector, and not unnecessarily put the burden on it. 

“The Minister of Communications and Digital Economy is not satisfied with any effort to introduce excise duty on Telecommunications. When VAT was increased to 7.5percent, I was not consulted, I only heard the announcement and I think there is something questionable and I am glad that we are on the same page with our national assembly members. They too have not been consulted despite the fact that they are part of the committee. 

“Beyond, making our position known, we will go behind the scene and go against any policy that will destroy the digital economy sector. This is a sector we cherish so much and we are ready to go to any extent, legitimately and legally to defend its interest.” he said. 

When contacted yesterday, Pantami maintained his lack of support for the planned excise duty hike.  

When asked to comment on why  Pantami is not in support of the new tax hike, his spokesperson Uwa Suleiman directed Daily Trust reporter to contact the NCC for clarification on her principal’s statement on his lack of support for the excise duty on telecom services.  

But when contacted, the NCC’s Director of Public Affairs, Mr Reuben Mouka said the “Minister had made his position public (at the Lagos event). He didn’t hide it.”