Hike in communication tax by 9%, additional burden on the masses


It has been an issue of concern for Nigerians and the telecommu-nication industry over the proposed plan by the Federal Government to impose a special tax of nine per cent for the use of communication services.

However, the Minister of Communications, Mr. Adebayo Shittu, had stated that the bill which is before the Senate and House of Representatives, had begun the legislative process to enact the bill which he said has passed its first reading.

The Communication Service Tax Bill 2015, currently in the National Assembly, will require consumers of voice, data, Small Messaging Service, Multi Media Service and pay TV services to pay a nine per cent tax on the fees paid for the use of these services.

The minister during the private sector dialogue session on the proposed communication services tax bill organised by the LCCI, stated that according to many schools of thought, the bill seeks to impose additional charges on users of electronic communication services in Nigeria.

He added that the proposed national ICT roadmap is poised to set out the intent and commitment of the government to continue the development of the ICT sector and implement the sector policies and plans in an integrated, focused and innovative manner that aligns with the change mantra of the current administration.

Shittu pointed out that the present administration’s goal is to provide cost effective, ubiquitous ICT access for overall national development, stating that as government plans to increase revenue, makes the bill worthy of consideration.

The Minister argued that the projected earnings from this effort is over N20 billion every month, which is an attraction to the government in funding the budget deficits

This move would only succeed in worsening the prevailing high cost of doing business in the country. The bill potentially creates and raises the issue of double taxation since Value Added Tax (VAT) Act already imposes tax of five per cent on the supply of goods and services.

If this tax increment is passed into law It will increase the present burden on the masses, because with the increment of tarrif by almost double the value of VAT, telecommunications operators will also increase tarrif on calls, thereby increasing the pressure on the masses.

Nigerian NewsDirect believes that the proposed nine per cent tax to be levied on consumers of communications services will result in an additional 10 per cent of the population – equivalent to nearly 20 million Nigerians – being unable to afford a basic broadband plan.

The passage of such a tax was likely to threaten Nigeria’s ability to achieve its goal of 30 per cent broadband penetration by 2018 and to undermine the socio-economic progress spurred by increased connectivity.

This tax would be collected on top of the five per cent Value Added Tax that consumers already pay when they purchase devices and communication services, the 12 per cent customs import duties paid on ICT devices, and the 20 per cent tax levied on Subscriber Identification Module cards.

This means Nigerians who are already over-burdened through fuel price increase, increase in price of foodstuffs and non-payment of salary and pension will face another levy and tax.

The Federal government should think of how to ameliorate the deteriorating living standard of the people rather than heaping more burden and problems on hapless Nigerians.