Abuja—The federal government is set hike consumption tax on telecom services as call and data tariffs may increase by as much as 100 percent.
Daily Trust reports that the federal government had recently disclosed plan to implement a five percent excise duty tax on telecoms 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 tax burden on the telcos which would translate into rise in tariffs.
If the five 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 five percent excise duty was in the Finance Act, 2020.
She said the accrued taxes would be remitted on monthly basis, on or before 21st of every month.
She explained that the move was part of 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 Minister of Finance, Budget and National Planning, Zainab Ahmed, and the Minister of Communication and Digital Economy, Prof Isa Ali Pantami, on collision course.
While the Ministry of Finance cites a 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.
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 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.
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 on 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 higher amount at the inception of the GSM. So it will not have effect on goods and services. We also have alternative to call such as WhatsApp call.
“By and large it’s better than additional loans for consumption,” he said.
