As Nigeria’s revenue shortfalls bite harder, the federal government has been seeking alternatives to the dwindling oil revenue that the non-oil sector has failed to upset.
The Minister of Finance, Budget and National Planning, Zainab Ahmed, disclosed that the federal government has finalized plans to introduce additional 5% tax on all telecom services, including calls, SMS, and data services.
Zainab made the new tax plan known at a stakeholders’ forum organized by the Nigerian Communications Commission on Thursday. She said the plan will help the federal government to offset the deficit emanating from poor oil revenue.
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“The issue of revenue is not something that need to be shy away from, our revenue can no longer take care of our needs as a country. Also Nigeria is no longer making enough money in oil revenue hence the attention is shifting to non-oil revenue,” she said.
The minister, who was represented by Musa Umar, Assistant Director, Tax and Policy, appealed to stakeholders to support the new tax plan.
However, the development has been greeted with scorn as it is seen as an attempt to compound Nigeria’s economic woes. Responding to the concern, Ahmed made reference to other African nations such as Malawi, Tanzania, and Uganda, who she said have successfully implemented such tax regimes to generate more revenue.
Although the minister allayed fears that the new tax plan will result in suffering with the promise that it will be implemented in a manner that bears no negative impact on Nigerians, many, including telecom industry stakeholders, disagree.
Engr Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria, ALTON, said the telecom industry won’t be able to absorb the impact on behalf of subscribers.
He lamented that the federal government is shifting taxes to services instead of goods and products. He said that subscribers will bear the burden as the telecom industry is already feeling the weight of 39 different taxes.
“It is a strange move, it appears a bit unusual. Excise duty is supposed to be apportioned to goods and products, but we are surprised this is on services,” he said.
“We currently pay a lot of taxes, running into 39 of them, so we can’t add more to our existing burden. We won’t be able to absolve this on behalf of subscribers. The five per cent excise duty will be paid by the subscribers. It will collected by the operators on all voice and data services including OTT and remitted to the Nigerians Customs”, he added.
The telecom industry served as Nigeria’s economic cash cow in the wake of the pandemic that crippled economic activities globally. But recently, the industry has been seeking approval for upward review of the cost of its services, including data, calls and SMS. It said the Russia-Ukraine conflict has resulted in a 35% hike in operational cost amidst other factors in the country that have made business difficult.
Thus, the implementation of a new telecom tax will leave the industry with no choice than to increase tariffs for its services.