Federal Government Slams New Tax On Phone Calls

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The Federal Government of Nigeria has announced a new tax on phone calls in the country to pay for free healthcare for the vulnerable group.

This is despite recent initiatives by telecommunications firms to raise their service prices due to an unfavourable operating environment.

The telecom tax of at least one kobo per second for phone calls is one of the sources of income required to finance free healthcare for Nigeria’s vulnerable population.

This is incorporated in President Muhammadu Buhari’s National Health Insurance Authority Bill 2021, which he signed last week.

Section 26 subsection 1c of the legislation says that the source of funds for the Vulnerable Group Fund comprises telecommunications tax, not less than one kobo per second of GSM calls.

“S.26 of this new law charges a telecommunications tax of not less than 1kobo per second on GSM calls,” said Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers. Call prices of around 11kobo per second equate to a 9% tax on GSM calls.

“The tax is one of the sources of funds for the Vulnerable Group Fund, which is used to subsidise the provision of healthcare to the group designated as children under the age of five, pregnant women, the elderly, the physically and intellectually challenged, and the impoverished as defined from time to time.”

The Vulnerable Group Fund, according to the legislation, is money earmarked to pay for healthcare services for disadvantaged Nigerians who cannot afford health insurance to subsidize the cost of providing health care services to vulnerable persons in the country.

The act provides several funding options, including a basic health care provision fund to the authority; a health insurance levy; a telecommunications tax of not less than one kobo per second of GSM calls; money that the Government may allocate to the Vulnerable Group Fund; motley that accrues to the Vulnerable Group Fund from investments made by the Council; and grants, donations, gifts, and any other voluntary contributions made to the Vulnerable Group Fund.

According to the new act, every Nigerian resident is required to purchase health insurance.

Recently, telecom companies complained to the Federal Government about industry circumstances via the Nigerian Communications Commission.

As a result of the increased cost of operating in the country, the operator suggested a 40% rise in the cost of calls, SMS, and data under the auspices of the Association of Licensed Telecommunication Operators of Nigeria.

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Gbenga Elebiyo

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