The minister of communications and digital economy, Isa Pantami, has condemned the plan by President Muhammadu Buhari’s administration to introduce a new 5% tax on telecom services.
Pantami made his belief known on Monday while speaking at the ongoing maiden edition of the Nigerian Telecommunications Indigenous Content Expo (NTICE) organized by the Nigerian Communications Commission in Lagos.
The minister argued that the ICT sector is becoming heavily burden with taxes than other sectors, promising to challenge the move.
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“We will definitely challenge the decision. There are about seven sectors of Nigeria’s economy contributing largely, and these sectors are less than two per cent of Nigeria’s economic sector. ICT contributes more than other sectors, and it should be encouraged, while those sectors contributing less to GDP should be monitored properly and ensure they do more. If we fail to do this, we will continue to increase and increase tax by the day,” Pantami said.
Last week, the Minister of Finance and National Planning, Zainab Ahmed, announced government’s plan to levy further excise duty on calls, data and SMS services. The decision has been largely decried. It is seen as an insensitive move that will compound the suffering of Nigerians.
But Ahmed defended the decision saying that the government really doesn’t have a choice but to explore other means to fill the revenue gap emanating from dwindling oil revenue.
“The issue of revenue is not something that needs to be shied 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.
In response, Pantami expressed concern that the decision, if it succeeds, will amount to further hardship as everyone depends on telecom services.
“You introduce excise duty maybe to discourage the consumption of certain products like alcohol, like tobacco and many pieces where you didn’t produce it.
“How can you do financial services in Nigeria without broadband? How can we communicate with ourselves? How can you, we, a hospital without Internet?” he asked.
Engr Gbenga Adebayo, Chairman of the Association of Licensed Telecommunications Operators of Nigeria, ALTON, said last week that the telecom industry won’t be able to absorb the impact of further taxes on behalf of subscribers.
“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 said.
The Nigerian government has failed to diversify the economy, making oil the main source of its revenue. With the oil market currently complicated for Nigeria due to lack of local refineries that is forcing the country to import refined petroleum products, thus making no profit as it pays subsidy to keep the products affordable, the government is shifting attention to the telecom sector that has served as the nation’s economy cash cow since 2020.