Panic as communications ministry declines FG’s 5% excise duty on sector - Nexus News

There seems to be a lack of understanding with the Federal Government as the Ministry of Communications and Digital Economy declined the planned implementation of a five per cent excise duty on the sector.

The Federal Government had, last week, revealed that telecommunications users would pay a five per cent tax on calls, SMS and data services.

But in Lagos, yesterday, the Minister of Communications and Digital Economy, Prof. Isa Pantami, declined the proposed tax.

This was at a forum organized by the Nigeria Office for Developing Indigenous Telecoms Sector (NODITS), an agency located in the Nigeria Communications Commission (NCC).

Pantami blamed the timing and process of enforcing the tax on the industry, stressing that part of the responsibility of responsive government is not to add more to the problems of citizens.

He said: “I have not been contacted officially. If we have, we surely will state our case. The sector that contributes to the economy should be encouraged. You introduce excise duty to discourage luxury goods, like alcohol. (But) broadband is a necessity!

“If you look at it carefully, the sector contributes two per cent excise duty, 7.5 per cent VAT to the economy, and you want to add more!

“We must come together and salvage the sector. Only the telecom sector contributed 13 per cent and you want to add more!”

Pantami blamed the lawmaking process that produced the tax because it didn’t carry the Chairman of the House Communications Committee along. “So, we reject it,” he said.

According to him, more tax on the sector will affect its contribution to the country’s Gross Domestic Product (GDP).

He said: “We will explore other means to reverse it! As a minister, based on the provision of the Constitution of Nigeria, Section 148, we are exercising the powers of Mr. President. That is what the Constitution says. I am a major stakeholder. When VAT was increased to 7.5 per cent, I was not consulted. I only heard the announcement.

“I think there is something questionable, and I am glad that we are on the same page with our National Assembly members that are here. They have not been consulted and they are part of the committees.

“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, which we cherish and will go any length, legitimately and legally, to defend its interest.”

Remember that, last week, in Abuja, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, implored stakeholders to support the implementation of the five per cent excise duty on telecommunications services.

Zainab, represented by the Assistant Director, Tax and Policy, Musa Umar, said that countries in Africa, like Malawi, Uganda, Tanzania and others, have all ventured into this revenue generation pattern.

Umar said: “The issue of revenue is not something we need to shy away from. Our revenue can no longer take care of our needs as a country. Also, Nigeria is no longer making enough money in oil revenue, hence the attention is shifting to non-oil revenue sectors.”

The minister stated that the government is committed to implementing the regulation in a seamless manner.

But the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, stressed that the new tax burden would be transferred to subscribers if implemented.

According to him, “it is a strange move. It appears a bit unusual. Excise duty is supposed to be apportioned to goods and products. But we are surprised this is on services. We will continue to support the government. But ALTON won’t be able to subsidize this on behalf of subscribers, in addition to the 7.5 per cent VAT, making it 12.5 per cent payable by subscribers to the Federal Government.

“We currently pay a lot of taxes; 39 of them! So, we can’t add more to the existing burden. We won’t be able to absorb this on behalf of subscribers.”