Still on why excise duty was bad for telecom sector

Array

Published:

By Aliyu Usman Rigasa

The scheme to impose a 5% excise duty on telecom services has continued to stir controversy in the telecommunications sector.

The policy, which is seen as an additional burden on top of the 7.5% VAT already paid by Nigerians on goods and services, will charge 5% of the total cost of each voice call made.

The payment will be deducted from the subscribers’ accounts by the telecom operator, who will remit it to the government. This will result in a 100% increase in the cost of voice calls.

The Minister of Finance, Budget and National Planning,  Zainab Ahmed,  at a stakeholders forum on excise duty in Abuja recently said, “The five per cent excise duty has been in the Finance Act 2020 but hasn’t been implemented.”

The Minister  represented at the event by an Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, said the delay in implementation of the five per cent excise duty was as a result of the government’s engagement with stakeholders. It added that payments would be made on the 21st of every month.

She further said, “The duty rate wasn’t captured in the act because it is the responsibility of the president to fix rate on excise duties and he has fixed five per cent as the duty rate for telecommunication services, which include GSM services.

“It is public knowledge that our revenue cannot run our financial obligations, so to that effect we are to shift our attention to non-oil revenue. The responsibility of generating revenue to run the government lies with us all.”

However, the chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, said operators would not be able to subsidise the five per cent excise duty on telecom services as a result of the 39 multiple taxes that they pay, coupled with the epileptic power situation that had compelled operators to spend so much on diesel.

The president represented by the executive secretary of ATCON, Ajibola Olude, cautioned that the idea be stepped down as it would lead to job loss.

He added that, “The five per cent excise duty on telecom services would not be in tandem with present realities,” adding that the industry was bleeding.

“The idea is untimely and not well intended, because the industry is not doing well currently”, he said.

However, the Minister said  she would implement the tax on all voice calls, SMS and data services, in addition to the existing 7.5 percent Value Added Tax, VAT, paid for goods and services across all sectors of the economy.

The five per cent excise duty came to the fore during a recent stakeholders’ meeting, organised by the Nigerian Communications Commission (NCC) the telecoms industry regulator.

At that meeting, the Finance Minister, as represented by the Assistant Director Umar said “The five percent excise duty has been in the Finance Act 2020, but has never been implemented.

“Henceforth, the five percent excise duty will be collected by telecom operators and payment made to the federal government on a monthly basis, on or before 21st of every month.”

Mrs Ahmed said there was a circular stating the planned hike, which was addressed to the Communication Minister and other relevant ministries and agencies of government.

She said, “The circular Referenced No. F. 17417/VI/286 dated 1st March, 2022, and titled “Approval for Implementation of the 2022 Fiscal Policy Measures and Tariff Amendments” was addressed to different ministers, including the minister of Communications and Digital Economy and other heads of government agencies.

“The circular was addressed to the Secretary to the Government of the Federation, Attorney-General of The Federation, ministers of Industry, Trade and Investment, Agriculture and Rural development, Mines and Steel and Development.

“It, therefore, means that all stakeholders have by that singular provision been aware of the act.

“The excise duty on telecommunication services provided in Nigeria introduced through the Finance Act, 2020 with statutory enactment on 1st January, 2021 is yet to be implemented considering the need to ensure reasonable transition period before the implementation of the new tax, as well as providing clarity to all stakeholders on implementation modalities.

“As a matter of emphasis, Mrs Ahmed had in a circular dated 1st March, 2022, informed the Nigeria Customs Service (NCS) and other heads of government ministries, departments and agencies (MDAs), including the Federal Ministry of Communication & Digital Economy about the President’s approval of the implementation of the five percent excise duty on telecommunication services with effect from 1st June, 2022.

“An issue as serious as the excise tariff cannot be taken single handedly, as all stakeholders and agencies have been involved including Manufacturers Association of Nigeria (MAN) and Association of Telecom Operators of Nigeria (ALTON), who wrote to the ministry to be involved in the modalities for implementation of the excise duty.”

However, It could be recalled that SAHELIAN TIMES reported that the minister of Communications and Digital Economy, Prof. Isa Ali Pantami, and the Nigerian Communications Commission (NCC) opposed the tax which they said was ill-timed.

Pantami said he is not satisfied with any effort to introduce excise duty on telecommunications.

 

“Beyond making our position known, we will go behind the scenes and go against any policy that will destroy the digital economy sector. This is a sector we cherish so much and we are ready to go to any extent, legitimately and legally to defend its interest,” Prof. Pantami said.

Similarly, the Executive Vice Chairman/CEO of the NCC, Prof. Umar Garba Danbatta, who was represented at the stakeholders meeting in Abuja by the Executive Commissioner, Stakeholders Management, Adeleke Adewolu, in his opening remarks said, “As communicated in the Federal Government circular of March 1, 2022, the five per cent excise duty was to have been implemented as part of the 2022 Fiscal Policy Measures, but the industry considered the earlier scheduled commencement date of June 1, 2022 inadequate and we duly took this up with the federal government.”

Also, NCC’s director of Public Affairs, Mr Reuben Mouka, said the “minister had made his position public and that is also the position of NCC.”

Mouka said NCC had always been ensuring the call and data tariffs go down.

Again, Mrs Ahmed insisted that there was a circular stating the planned hike, which was addressed to the communication minister and other relevant ministries and agencies of government.

She said, “The circular Referenced No. F. 17417/VI/286 dated 1st March, 2022, and titled “Approval for Implementation of the 2022 Fiscal Policy Measures and Tariff Amendments” was addressed to different ministers, including the minister of Communications and Digital Economy and other heads of government agencies.

“The circular was addressed to the Secretary to the Government of the Federation, Attorney-General of The Federation, ministers of Industry, Trade and Investment, Agriculture and Rural development, Mines and Steel and Development.

“It, therefore, means that all stakeholders have by that singular provision been aware of the act,” she said.

Related articles

Recent articles

spot_img