‘Operators pay 26 different taxes, levies in Nigeria’
*ALTON believes CST Bill makes Buhari’s government unpopular
While opposition continued to mount against Federal Government’s plan of impose a fresh nine per cent tax on some activities in the ICT sector, the Association of Licensed Telecommunications Operators of Nigeria (ALTON) has again urged the bill be dropped by the National Assembly.
ALTON, which said the bill would make the government become more unpopular with the people, hinted that currently, operators pay about 26 different forms of taxes and levies.
ALTON said mobile operators and consumers, pay taxes and levies including national and local taxes on revenues, businesses and business sites as well as regulatory fees such as spectrum and permits fees.
As such, the body said the CST bill will negatively impact take-up of consumer services and decline industry revenues.
According to the body, chaired by Gbenga Adebayo, an engineer, the proposed tax will reduce the incentive for telecommunications operators to invest in the infrastructure improvements that are essential to improve and expand mobile/broadband connectivity across Nigeria.
ALTON observed that telecommunications industry investment in Nigeria is already constrained by multiple taxation and may not have room to contain the tax.
The body averred that high consumer taxes on communication services would impact negatively on economic and broadband development.
“Today the country has more than 83 million unique subscribers, accounting for 45 per cent of the population. As well as providing access to financial services, education and healthcare to millions of citizens, many for the first time, telecommunications has also played a critical role in reducing transportation, communication and transaction costs.
“Pushing up the cost to consumers, this tax will inevitably adversely impact the adoption of broadband affordability which is a key challenge in connecting the unconnected
“In addition, the telecommunications ecosystem contributed $8.3 billion in value add to the Nigerian economy in 2014 alone, and operators supported the creation of 164,000 telecommunications growth is a fundamental part of the government’s Vision 2020 plan to consolidate Nigeria’s position as one of the 20 largest economies jobs . Such is its significance, that driving in the world and a central element of President Buhari’s election manifesto,” the body stated.
The body opined that the introduction and collection of the tax without the exclusion of the applicability of the Value Added Tax (“VAT”) (which was introduced by the Value Added Tax Act and is also applicable to services rendered by service providers in the telecommunication sector) will amount to double taxation as the proposed tax is an additional one on communication services rendered to the same end users who already pay a five per cent tax as VAT.
ALTON added that the administration of this tax regime as proposed will be cumbersome and impractical.
“We must correct this general notion that service providers can absolve any tax without considering the capital and operational cost to the service providers,” it stated.
According to the operators, the introduction of the CST law without the harmonization of other extant laws is likely to make the current government unpopular, as it will put pressure on the Nigerian tax system, which will make it unattractive to investors and may also be counter-productive for targets on broadband penetration.
Instead of laying untoward hardship and heavy burden on an already impoverished citizenry, ALTON advised that government comes up with policies that stimulate the economy and put measures in place to ensure a more efficient tax system and framework for tax compliance.
“A good place to start will be to review and cut down the cost of governance at all levels. The sheer magnitude of the effect of this law cannot be imagined,” the body stated.
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