More worries for telecoms subscribers as FG plans 5% duty on recharge cards

While Nigerians are yet to come to terms with the planned 40 per cent hike in telecoms services tariffs by telecoms operators, it appears more pains will be inflicted in the coming days, as the report has it that the Federal Government has approved the collection of five per cent excise duty on telephone recharge cards and vouchers.

According to a report by TheCable, President Muhammadu Buhari actually gave the directive.

In a letter by the Association of Licensed Telecoms Operators of Nigeria (ALTON) to the Nigerian Communications Commission (NCC), the service providers had claimed that the economic challenges, rising energy costs, Russia/Ukraine war, among others, necessitated the need for them to hike the cost of calls, SMS, and data.

Based on ALTON’s proposal, the price floor of calls will increase from N6.4 to N8.95 while the price cap of SMS will increase from N4 to N5.61.

But in TheCable report, the five per cent charge is part of new items on the list of goods liable for excise duty on the Finance Act in the country.

Excise duty is a levy charged at the time of manufacturing. It is also a form of indirect tax on the sale or consumption of certain goods, products, services or activities such as tobacco, alcohol, narcotics, gambling etc., mainly to discourage their use and consumption. Nigeria’s Finance Act has extended the list to include beverages, and non-alcoholic drinks, among others.

According to the report, which made reference to a circular signed by the Minister of Finance, Budget and National Planning, Zainab Ahmed, that directed the Nigerian Customs to create a tariff line for the collection of the excise on mobile telephones, electricity meters (components) and set up boxes at five per cent.

The Federal Government is expected to raise at least N150 billion from the duty, while customs will pocket about N10 billion, a seven per cent collection fee.

The circular conforms to another list of excisable items by customs to include telephone recharge cards and vouchers at five per cent.

It was also gathered that the collection was part of new items on the 2020 Finance Act signed by President Buhari. Although no rate was not stated, it is clear that the President might have okayed the collection of the duty at five per cent as empowered to do by the Act.

A telecoms expert, Kehinde Aluko, said fixing telecoms tariff is not impromptu, it takes processes. “Consultants will be contacted, the processes could take a year. The current tariff they are currently operating with went through that rigour. So, even if their demand will be considered, it will also take a process which is not going to encourage an instant implementation.”

“As much as there are challenges in the country, necessitating so many drastic situations, I believe telcos can still manage. They are still declaring huge profits. I will say instead of hiking tariffs, they should look at other areas they can explore to bring in more earnings.”

When The Guardian got across to NCC to confirm this, a senior official, who crave anonymity said the commission could not confirm it, “but it is possible that such may be in the pipeline.”

A senior ALTON official, however, said the body was in the know that the Nigerian Customs Service was directed to come up with excise duty on some telecoms products and services, “but I don’t know how far they have gone. Will cross-check and get back.”