Private Sector Kicks Against FG’s Bid To Commence 9% Tax on Calls, SMS, Data Usage

The bill which is currently in the senate, include services for voice call, SMS, MMS, Data usage from telecommunication service providers, internet service providers and Pay TV Stations.

Speaking at a stakeholders’ meeting organised by the Lagos Chambers of Commerce and Industry (LCCI), on CST bill, the Minister of Communication, Adebayo Shittu said the outcome on the deliberations on the bill, would determine the basis of his advice to President Muhammadu Buhari.

Shittu noted that if the new tax bill is approved and the existing ones not harmonised, the country’s tax system would be unattractive, which would in-turn drive investors away.

“This may also be counter-productive in the long run for our targets on broadband penetration,” the minister said.

“Our ICT Roadmap gives fresh impetus for implementing existing policies and reviewing any that is inimical to the growth of the sector. My focus on any tax regime will be to align any process that will stimulate the economy and also ensure that the tax system is efficient by widening the tax net.

“It is also to create an effective framework for tax compliance to protect the poor and vulnerable in the society who nonetheless have to use telecoms services for social inclusion and financial services.”

He however said the president’s view to increase the revenue base of the country, necessitated the need for the bill.

“I have been reliably informed that the projected earnings from this effort is over N20 billion every month, which is an attraction to the government for funding our budget deficits.

“I must be quick to say that this government has a human face twined around its decisions,” Shittu added.

The minister said that the government would provide an enabling environment for the ICT and telecommunication sector to thrive through the enactment of relevant legislation.

Meanwhile, business leaders in the private sector have kicked against the bill, noting that the federal government needs to balance its drive for taxation, in other to maintain a friendly business environment with the private sector.

“We know that the government is seeking to diversify its revenue base. But it is also true that the private sector players would like to see an investment-friendly environment, especially in the light of the prevailing high cost of doing business in the country,” Mrs. Nike Akande, president, Lagos Chamber of Comerce and Industry, said, at the private sector dialogue on the proposed tax in Lagos on Wednesday.

The chamber believes that it is in the best interest of Nigerians to have a virile, robust and growing economy, Akande said, adding that creation of a good business environment is imperative to making this proposal happen.
Taiwo Oyedele, partner at PricewaterhouseCoopers, said the calculated estimate for the proposed Communication Tax bill of N20 million per month was unrealistic

“But then they have constructed the bill on wrong assumptions and have overestimated, because if the tax on communication and internet services will be increased, then definitely the users of these services will drastically decrease, resulting in them making way less than they anticipated and estimated,” Oyedele said.

Oyedele stressed that Nigeria remains one of the lowest tax compliance countries, despite being Africa’s most populous nation, adding that the government government should focus more attention on tax evaders and increase the number of tax payers rather than on impose taxes on telecommunications, which might end up retarding the wheel of progress in the economy and country as a whole.

“There are only 10 million tax payers from the 36 states. Therefore, we expect that policies made should leverage the telecommunication sector to help expand tax rate, not imposing tax on telecommunication services, thereby discouraging the sector instead of encouraging it.”

Chairman, Taxation and Commercial Law Committee at LCCI, Mr Bimbo Atilola, said that the bill negated the principle of neutrality in taxation, stating that it would affect consumers’ behaviour through reduced spending.
He pleaded with the government to suspend the passage of the bill to allow for rapid growth of the telecoms sector, in line with the Nigerian National Broadband Plan.

“If the bill must be passed into law, NASS should make the telecoms sector exempted under VAT Act and the rate reduced from nine per cent to five per cent. There is a need to protect the ultimate interest of the final consumers of the service,” Atilola said.