It is insensitive and will exacerbate Nigerians’ suffering – Stakeholders
Stakeholders in the telecommunications sector have described the Federal Government’s plan to impose an additional 5% excise duty on telecommunications operators in Nigeria as insensitive and less compassionate.
The implementation of a 5% excise duty by the Nigerian Customs Service (NCS), an agency of the Federal Ministry of Finance, Budget, and National Planning, would bring the total tax levied on telecoms consumers to 12.5 percent, in addition to the 7.5 percent VAT.
Speaking on Thursday at the Stakeholders Consultative Forum on Excise Duty Implementation in Abuja, Gbenga Adebayo, Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), decried the negative impact the implementation would have on the ease of doing business and, by extension, telecom consumers.
Adebayo confirmed that telecom operators will not be able to absorb the 5% excise on behalf of subscribers, as subscribers will bear the brunt of the additional cost if the plan is implemented.
The decision was made due to the fact that Mobile Network Operators (MNOs) already pay 39 different taxes to the Federal Government and will not be able to add any additional costs beyond what they are already incurring.
He noted that the cost of production on MNOs is already high, ranging from diesel, electricity, and other exegesis costs, and that the implementation would only result in downsizing while stifling foreign direct investment.
“We will assist the government in this effort, but we will not pay for subscribers.” We will shift the burden to the customers and then to customs.
“We will continue to support the government, but ALTON will not be able to subsidize this on behalf of subscribers in addition to the 7.5 percent VAT, making it 12.5 percent payable to the federal government by subscribers.”
“We already pay a lot of taxes, 39 of them, so we can add to our existing burden.” We will not be able to compensate subscribers for this.
Engr Ken Nnamani, President of ATCON, stated that “the proposed exercise duty does not comply with the principles of taxation, fairness, certainty, convenience, and efficiency.”
He requested that the implementation of the exercise duty be slowed because many Nigerian youths would lose their jobs.
He suggested that the government focus its efforts on developing other sectors.
Hajia Zainab Ahmed, Minister of Finance, Budget, and National Planning, stated in her speech on the rationale for the federal government’s plan to implement the 5% excise duty that there is a need for government to make more money to diversify the economy away from the oil sector.
The Minister, who was represented by the Ministry’s Assistant Director, Tax and Policy, stated that other countries in Subsahara Africa have excise duties on MNOs and that Nigeria will be the country with the lowest charge when it implements when compared to other countries in the region such as Malawi, Uganda, and Tanzania.
“The issue of revenue should not be avoided; our revenue is no longer sufficient to meet our country’s needs.”
“In addition, Nigeria is no longer making enough money from oil revenue, so the focus is shifting to non-revenue.”
In a similar vein, Assistant Controller of Customs Lami Wushishi, who represented Controller General of Customs Hameed Ali, stated that there is no going back with the tariff implementation because it has been enacted since 2020 but has not yet been implemented.
Responding to stakeholder calls to scale back plans to implement the new excise duty, Wushishi stated that it is not within the scope of the NCS to kill a policy, but rather to implement it, as it is only acting on instructions from the federal government.
Earlier in his opening remarks, the NCC’s Executive Vice Chairman, Prof. Umar Danbatta, who was represented by the Executive Commissioner of Stakeholders Management, Adeleke Adewolu, stated that the forum is intended to foster interaction between industry stakeholders and Excise Duty implementation agencies in order to produce a framework that adequately addresses the peculiarities of the telecoms sector.
He urged all participants to take advantage of the opportunity for substantive and professional interaction with the implementing agencies.