CST bill and the telecoms industry
Sir: Just as the Federal Government recently disclosed that Nigeria is in an economic recession, reports have it that 60 million phones have become inactive in the last three months. This has been attributed to the erosion of people’s purchasing power as the harsh economic condition in the country continues to bite. Telecoms operators in the country function under the same harsh economic environment, which is worsened by lack of infrastructure, inefficient electricity, ineffective regulation and multiple taxation among other challenges. Yet, the sector remains a major contributor to national socio-economic development through the provision of jobs and its immense contribution to the nation’s economy.
Now facing the already shaky situation in the telecoms industry is the Communication Service Tax (CST) Bill which is positioned to put a lot of pressure on the already turbulent terrain in the industry, a burden that would eventually be passed to their customers – the poor masses. Nine per cent additional tax burden on telecoms customers would result in low patronage. This may lead to erosion of return on investment, business collapse and eventual relocation of some operators to other friendly environments. Just as some businesses exited while others threatened to pull out of Nigeria due to challenges occasioned by CBN’s policies.
If these happen, then we should expect massive job losses that will affect different sectors as many businesses rely on telecommunication services to operate. Nigeria stands to lose investments and GDP will nosedive further. Capacity utilisation of the telecom industry will decline and the economic crisis could worsen.
This planned tax regime will wreak unprecedented socio-economic havoc in the country. The aviation sector is already in a mess as some airlines are finding it increasingly difficult to operate, making them to suspend their operations. Banks have sacked many of their workers while over 19,000 public service jobs have been wiped out across all tiers of government.
In spite of economic recession and harsh operating conditions, telecom service providers have continued to invest in the Nigerian economy with the hope to revive the sector and stimulate the Nigerian economy. However, government’s decision to impose service tax on users of telecommunication services can blight the potential of a vibrant telecoms industry as one of the pathways to economic recovery.
The government and the National Assembly in deference to the mood of the nation, therefore, should stand down the passage of the CST Bill as its introduction is most inauspicious at this material time.
• Laraban Imam, 22, Lagos Street, Garki 2, Abuja.