Confusion as communications ministry rejects FG’s 5 percent excise duty on sector

We’ll explore every legitimate means to stop it, says Pantami

There appears to be a lack of cohesion within the Federal Government as the Ministry of Communications and Digital Economy rejected the planned implementation of a five per cent excise duty on the sector.

The Federal Government had, last week, disclosed that telecommunications subscribers 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, rejected the planned tax.

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

Pantami faulted the timing and process of imposing the tax on the industry, arguing that part of the responsibility of responsive government is not to increase 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 telecoms sector contributed 13 per cent and you want to add more!”

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

According to him, further tax on the sector will impact 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 scene 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.”

Recall that, last week, in Abuja, the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, urged 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, noted that countries in Africa, like Malawi, Uganda, Tanzania and others, have all keyed 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 explained that the government is committed to implementing the regulation in a seamless manner.

But the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, insisted that the new tax burden would be passed 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 subsidise 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.” (The Guardian)