Nigeria: ALTON Raises Fresh Concern Over Communications Tax Bill

The planned introduction of Communications Tax Bill, which seeks to increase telecommunications tax by additional five per cent, has continued to elicit reactions.

The National Assembly is planning to introduced the bill, which has passed through the first reading at both floors of the House of Representatives and the Senate.

Sensing that the bill would soon scale through the second reading, the Association of Licensed Telecoms Operators (ALTON), on Tuesday, raised a fresh alarm, calling on the National Assembly members to jettison every move that will likely help the bill to scale through the second reading. Their fears are that by the time the bill scales through the second reading, there is every possibility that it would be signed into law.

Nigerians from all walks of life have widely condemned the bill, which they said would lead to increase in tariff at a time when telecoms subscribers are enjoying a continuous drop in the cost of telecoms tariff, following various measures deployed by telecoms operators to add value to their service offerings, while attracting more customers to their networks.

But in spite of the condemnation, the National Assembly members seem determined to pass the bill, with a strong belief that it would rake in more money for government and also boost telecoms contribution to GDP.

Worried about the situation, the Chairman of ALTON, Gbenga Adebayo, said in a statement made available to THISDAY, that the bill, if passed into law, would turn out to be additional burden on the telecoms operators who had already been laden with various taxes at the federal state and local government levels, and who would in turn transfer the burden to telecoms subscribers by way of tariff increase.

“Our opinion is that the introduction and collection of the tax without the exclusion of the applicability of the Value Added Tax (VAT), which was introduced by the Value Added Tax Act, will amount to double taxation as the proposed tax is an additional tax on communication services rendered to the same end users who already pay a five per cent tax as VAT,” Adebayo said.

Also the administration of this tax regime as proposed, would be cumbersome and impractical. We must correct this general notion that service providers can absolve any tax without considering the capital and operational cost to the service providers, Adebayo said in a statement.

Addressing the issue of affordability challenge in connecting the unconnected, Adebayo said: “High consumer taxes on communication services would impact negatively on economic and broadband development.”

He said by pushing up the cost to consumers, the tax would inevitably adversely impact the adoption of broadband affordability, which is a key challenge in connecting the unconnected.

While dwelling on the adverse impact the proposed bill will bring on telecoms infrastructural development in the country, Adebayo argued that the Communication Service Tax will negatively impact the take-up of consumer services and decline industry revenues. “The proposed tax will reduce the incentive for telecom operators to invest in the infrastructure development that are essential to improve and expand mobile/broadband connectivity across Nigeria. Telecom industry investment in Nigeria is already constrained by multiple taxation and may not have room to contain the tax,” Adebayo added.

He recounted that there are 26 different taxes and fees levied on mobile operators and consumers, including national and local taxes on revenues, businesses and business sites as well as regulatory fees such as spectrum and permits fees, and warned that additional tax may spell doom for the telecoms industry.