LCCI issues statement on new telecom tax in Nigeria
The recently signed National Health Insurance Authority Bill 2021 (replacing the National Health Insurance Scheme Act, 2004) by President Muhammadu Buhari, GCFR, places a new telecoms tax equivalent to a minimum of one kobo per second on phone calls by subscribers. The realised funds, estimated to be about N90billion yearly, are meant to finance free healthcare for the vulnerable groups — children under five, pregnant women, the aged, and physically and mentally challenged Nigerians.
The Lagos Chamber recognises the government’s struggle with providing healthcare services in the face of the economic realities we face as a nation today. The private sector has always shown its commitment to supporting the government’s efforts in providing some public infrastructure for the common good of all or mainly for the underprivileged. Since the liberalisation of the telecoms sector in 1999, licensed GSM operators have invested heavily in infrastructure to guarantee quality service to telecom subscribers. Due to the rising cost of operations, telecom companies under the Association of Licensed Telecommunication Operators of Nigeria (ALTON) have put a plan in place for a proposed 40per cent increase in the cost of calls, SMS, and data in the coming weeks.
The implications of all of these are that subscribers will be made to pay more for telecom services. And companies that depend heavily on the telecommunication infrastructure to deliver their services will likely begin to incur an additional cost burden even as they currently struggle to comply with about thirty-six different taxes.
Beyond the cost of taxation on telecoms operators, we wish to call the government’s attention to creating a regulatory environment that promotes enterprise—investing more in telecoms infrastructure for a thriving digital economy and minimising the disruptions to telecoms companies’ operations while enforcing tax compliance. The realised funds must be well managed to achieve the objective of the tax. A fair and transparent system is critical in identifying the ‘vulnerable group’ that qualifies for the Vulnerable Group Fund. The N876Bilion allocation to health in the 2022 Federal Budget is 5.1 percent of the total budget and lower than the 15 percent minimum allocation as agreed in the Abuja Declaration of 2001. Nigeria’s health sector requires and deserves more allocation considering the state of healthcare delivery in our nation today.
