The 160 million mobile phone users in the country, are expected to pay more on calls and data in 2023 as the federal government infused 5 per cent excise duty on telecoms services in the 2022 Finance Bill before the National Assembly.
The federal government had mooted such idea, earlier in the year, but suspended it after much outcry only to now resurface in the 2022 Finance Bill currently before the National Assembly(NASS) for passage into an Act.
The bill, when it becomes law, is expected to be a working tool for the economy in 2023.
Investigation revealed that inclusion of this tax is a continuation of the federal government aggressive move to generate more revenue through tax to finance 2023 national budget.
This development, however, did not go down well with Telecoms operators who said, they will pass on the new tax down to consumers, even as the National Association of Telecoms Subscribers (NATCOMS) has threatened to take federal government to court next week, if it fails to step down the proposed 5 per cent telecoms services tax in the 2022 Finance Bill.
A document titled ‘Invitation to a One Day Public Hearing and Submission of Memoranda on the 2022 Finance Bill,’ released by the House of Representatives Committee on Finance, revealed that, telecommunication services provided in Nigeria shall be charged with duties of excise at the rates specified under the duty column in the Schedule as the President may by Order prescribe pursuant to Section 13 of this Act.
The document stated that, the reason for the excise duty was to increase revenue generation/tax administration.
Although, the said document did not specify the rate at which the excise duty would be charged, investigation revealed that the duty is 5 per cent.
If passed into law, the telecommunication operators, under the aegis of the Association of Licenced Telecoms Operators of Nigeria (ALTON), reiterated that the cost will be passed on to Nigerians, as operators cannot bear the cost alone.
The head, operations at Association of Licensed Telecommunications Operators of Nigeria (ALTON), Gbolahan Awonuga said,, it is sad to know that despite the plea from different stakeholders in the ICT sector, the federal government still insisted on imposing excise duty on telecoms services after it was suspended.
This will definitely compel operators to adjust the rates of calls and data upward, as they cannot bear the cost alone, Awonuga added.
He revealed that, since 2003, operators didn’t review the tariff, not because it has been all great, (like other sectors, telecommunication industry was financially impacted following Nigeria’s economic recession in 2020), but because, they didn’t want to add unnecessary financial burden on Nigerians.
The head of operations, ALTON further explained that most telecoms operators don’t rely on the national grid to power their towers, adding that, the cost of diesel required to power operators’ Towers, Base Stations and offices rose by a staggering 233 per cent from N225 per litre in January 2022 to over N750 per litre in December 2022.
“Additionally, the introduction of new lines of fiscal obligations via the Excise Duty of 5 per cent on telecommunications services further exacerbates the burden of multiple taxes and levies in the sector,” he added.
These and many other reasons, justify why telecoms operators will increase voice and SMS tariff, if the federal government insists on the five per cent excise duty on telecoms services, Awonuga averred.
Recalling that the Nigerian Communications Commission (NCC) has, in October 2022, asked all telecommunications services providers to reverse the upward tariff adjustments for some voice and data services, Awonuga said, it will be a joke, if the Commission restricts operators from increasing call tariff, once the five per cent excise duty is passed into law. “It means NCC wants to destroy the industry,” he stated.
He, however, called on Nigerians to kick against the five per cent excise duty, as they will be mostly affected. “Operators cannot absorb all the cost, as they will have to pass some of it on the consumers, to remain in business,” he stated.
Meanwhile, the national president, National Association of Telecoms Subscribers (NATCOMS), Chief Adeolu Ogunbanjo said, the association will be left with no other option than to take the federal government to court if it decided to implement the five per cent excise duty on telecoms services.
Ogunbanjo said, there are 39 other taxes that the Telecoms sector is paying to the federal government, states government and local government, but the majority of the tax go to the pocket of the federal government.
Adding more tax to the sector is so insensitive on the part of the federal government, NATCOMS’ president said, adding that, telecoms subscribers would resist the new tax regime, because of its grievous implications on subscribers and the telecoms sector.
He stated that the minister of Communications and Digital Economy, Prof. Isa Ali Pantami kicked against the five per cent excise duty, other agencies like the Association of Licensed Telecommunications Operators of Nigeria (ALTON), the Association of Telecommunications Companies of Nigeria (ATCON) and NATCOMS also condemned the five per cent excise duty on telecommunications services.
It is sad that the ministry of finance did not listen to our plea and cry, Ogunbanjo said, adding that, “We are left with no other option than to go to court. By first week of January, 2023, we are going to court.”
He however appealed to the father figure of president Muhammadu Buhari and the mother figure of the minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, to reconsider their decision.
