As 2% call tax steals feathers in telecommunications industry


The federal government’s plan to tax all telephone calls at 2%, on top of existing taxes and levies on telecommunications operations, has continued to draw reactions from subscribers and telecommunications operators, who have threatened to challenge Feds in court if tax imposed, writes Emma Okonji

Reactions continued to follow the federal government’s recent plan to impose a 2% tax on all phone calls. Telecommunications service providers and their subscribers have stressed the need for the government to consider the implications of imposing another tax on telecommunications subscribers, different from the 5% excise tax on telecommunications consumption and arbitrary telecommunications levies and taxes by federal and state government agencies. Governments.

To show the seriousness of their positions, they threatened to challenge the federal government in court, if the government refused to reverse its decision on the 2% tax on telephone calls.

The 2% tax, which equates to a minimum of one kobo per second for phone calls, is among the sources of funds needed to fund free healthcare for the vulnerable group in Nigeria, according to the National Health Insurance Authority. Bill 2021. signed by President Muhammadu Buhari penultimate week.

Telcos currently charge N4 for SMS and N6.40k per minute for all voice calls that terminate on other networks.

According to the Nigerian Communications Commission (NCC), the telecommunications industry regulator, Nigerians made 150.83 billion call minutes in 2020, which translates to 9.05 trillion call seconds. calls. This means that the planned 2% tax will generate 9,050 billion kobo in one year, equivalent to 90.05 billion naira per year.

The unrest of subscribers

National Association of Telecommunications Subscribers (NATCOMS) Chairman, Chief Deolu Ogunbanjo, who reacted to the planned 2% tax on telephone calls, told THISDAY that telecommunications subscribers would resist the new tax, because of its serious consequences for subscribers and the telecommunications sector. .

According to him, the National Health Insurance Authority Bill 2021 was supposed to go through first and second reading on the floor of the National Assembly, before it could be sent to President Muhammadu Buhari for signature, but we were surprised to know that President Buhari signed the bill without public hearing or input from the public.

“It is absurd to know that a bill, which depends on telecommunications levies and taxes, has been passed without the input and consent of telecommunications subscribers, who will be taxed to raise funds for the purpose of which the bill was passed and signed into law.. We were told that the money that would be made would be used to fund the national health insurance scheme for the vulnerable.

“One thing the government failed to understand is that over 90% of Nigerians are vulnerable except for politicians and their aides who made up the remaining 10%. So if 90% are vulnerable, why will the government charge the same people to raise money to take care of them? What drove the government’s decision to depend on telecom taxes to fund the insurance scheme for the vulnerable? asked Ogunbanjo.

He has previously said that telecom operators are saddled with more than 25 different taxes and levies from federal, state and local governments, and he questioned the rationale for the federal government’s motive to impose an additional tax on the sector. telecommunications and still wants the sector to survive.

Ogunbanjo added, “Telecom services are the only services the masses are enjoying right now and the government wants to use taxes and levies to stifle them. Subscribers find it difficult to buy fuel to power their generators which will serve their business and they also buy fuel for their cars, and the cost of fuel has skyrocketed, yet the government wants to increase the burden by an additional tax of 2 % on all phone calls. calls. It will kill subscribers if you ask me and we will resist it at all costs.

When asked how he intended to mobilize Nigerians to resist the 2% tax on all telephone calls, Ogunbanjo said NATCOMS had already opened up conversations with non-governmental organizations and society. concerned, including the Socio-Economic Rights and Accountability Project (SERAP), and would further involve the judiciary by going to court to challenge the federal government over the imposition of the additional 2% tax on all telephone calls for the financing of the national health system for vulnerable people.

He added, “As far as we are concerned, we were not swept away before the bill was signed into law by President Buhari, which shows that the bill was secretly passed. For anything that will affect all Nigerians, we deserve to be blown away.

Telco bustle

The Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, who also spoke to THISDAY in a phone conversation, said the telecom operators have yet to receive any guidelines of the government to implement such a tax, even though word has spread. far that the government is about to introduce another tax on telecommunications operations.

According to Adebayo, “We have not yet received the official directive, but if it is true that the federal government wants to tax all telephone calls at 2%, we will be surprised if such a tax comes at this time. The reason for this is that when we recently suggested to our regulator to review the current economic indicators affecting the telecommunications sector, to increase the cost of providing telecommunications services by 40%, to cushion the economic effect on telecom operators, the government said now is not the time to look at the cost of providing telecom services, given the difficult times Nigerians are going through. We would therefore be surprised if the same government now announced that it was introducing a 2% tax on telephone calls.

So if that’s true, what is the moral justification for introducing a 2% tax on telephone calls and expecting us to collect that money and hand it over to the government, when the government has refused to support our request for revision of the cost of providing telecommunications services on the networks? Adebayo asked.

He said, however, that if the directive were given to levy the 2% tax on telephone calls, it would amount to telecom subscribers getting less value for what they pay for telephone calls. He further stated that it would also limit the fiscal power of telecom subscribers to a certain percentage.

“As telecom operators, we believe that the time is not right and we would like the government to look at current economic indicators, before introducing a tax on telecom operations. The truth is that once directive given, we will have no choice but to obey the government directive and implement it to the letter and hand over the money to the government, but this will affect telecom subscribers very badly,” Adebayo said.

5% excise tax

Shortly thereafter, the federal government introduced a 5% excise tax on telecommunications transactions, a development that is also causing unrest from telecommunications subscribers and telecommunications service providers.

Adebayo, while reacting to the 5% excise tax, told THISDAY that the tax would negatively impact telecom subscribers and called on the federal government to be cautious in introducing another tax on telecommunications operations.

“The government cannot tax to death the sector which is the main driver of the economy. The government cannot tax the extinction, the services that are essential to the population. So the government has to be careful with all these different forms of taxes on telecom operations,” Adebayo said.

Telecommunications taxes

Apart from taxes, telecom operators also face all kinds of levies from federal government agencies, state governments, and local governments across the country.

A few months ago, telecom operators gave the federal government a seven-day ultimatum to resolve the issues of relentless closure of telecom sites in Kogi State and refusal by the Federal Capital Development Authority (FCDA) to allow telecommunications operators to build telecommunications infrastructure in the Federal Capital Territory. (FCT).

Telecom operators have warned that they will be forced to start nationwide disconnection of telecom services if the issues in Kogi state and other states including FCT are not resolved after seven days.

Telecommunications infrastructure

The telecommunications infrastructure has fallen into a deplorable state in some States, due to the deliberate destruction of telecommunications sites by criminals, a development that is currently affecting the quality of telecommunications service delivery in the environments of the affected States.

Speaking on the state of telecommunications infrastructure across networks, Adebayo said: Although we are trying in the area of ​​telecommunications infrastructure, the operating environment is very difficult. The cost of telecommunications business is high. The cost of diesel has become so high and it is a major source of energy for telecom operators. The InfraCos are struggling to provide telecommunications infrastructure in all states of the federation, and they face strong opposition from miscreants, who continue to destroy telecommunications facilities in some states.

For the planned 5G rollout, Adebayo said the current infrastructure would be resilient enough for the 5G rollout, but raised concerns about the sustainability of the 5G infrastructure post-rollout.

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