The rejection of the proposed 2.5% increment in Valued Added Tax (VAT) by the National Assembly was celebrated by businesses, companies and entrepreneurs. The National Assembly was praised for understanding the plights of SMEs and the implication the VAT increment would have on the overall economy of the country.
The decision of the lawmakers to halt the implementation of VAT was celebrated until they proposed 9% communication tax. It sent chills to the bones of the hopefuls, and anxiety to businesses that are already on life support.
If given the choice, many would prefer the 7.5% VAT although they are all seen as outrageous.
There is concern that the present government appears to be establishing a tax regime that will make up for the revenue lapses from other economic sectors. And they seem not to bother about whose ox is gored by the approach.
The chairman of the Federal Inland Revenue Service (FIRS), Mr. Babatunde Fowler, says the proposed communication tax is no big deal because Nigerians are equal to it.
“I will put it this way, Nigerians talk a lot on the phone; they even talk more than is required, so for them to capacity or revenue to talk that much, I don’t see any harm in paying a little bit more to government.” He said.
The 9% communication tax bill, if passed, will be levied on all electronic communications: SMS, MMS, voice calls and the internet. That means, every Nigerian phone user will have to pay based on the assertion that every Nigerian communicates like the rich.
The communication tax bill is coming at a time when internet data consumers, especially entrepreneurs, are complaining that the cost is becoming too high.
Mr. Fowler justified the move citing Ghana’s 2% education tax as an example. He said it has resulted in education development in Ghana, and Nigeria should borrow a leaf from that.
However, it is a popular knowledge that Ghana has made economic progress by cutting taxes, reducing their VAT, and waiving taxes for entrepreneurs.
The Nigerian government’s recent approach to taxes is said to be as a result of its dwindling revenue generation from the oil sector. Experts believe that attempts to make up for the losses through taxes will harm the already wobbling economy. Many SMEs in Nigeria are using their last lifelines due to lack of basic infrastructure to thrive on. So they need tax waivers to cushion the effects of the infrastructural decay.
In the age of data mining, when Information Technology is replacing natural resources, the Nigerian government has been encouraged to support internet based enterprises. Nigerians are concerned that the recent communication tax bill will only compound the woes of entrepreneurs.