‘Compounding Consumer’s Burden With Communication Tax’ | Independent Newspapers Limited
Newsletter subscribe

Latest News

‘Compounding Consumer’s Burden With Communication Tax’

Posted: Apr 1, 2016 at 2:00 am   /   by   /   comments (0)

As government plans to introduce another round of tax in the telecom industry, Ikechi Nzeako, who has been tracking developments on the issue reckons that government may be adding more burdens to the beleaguered Nigerian consumers.


When Bolaji Adekunle, 42 years old, graduated from the university 12 years ago, he was optimistic that securing employment was certain. But as it turned out, things did not work out as planned as he waited for four years without a job. Realising that time was ticking and his aged parents could not shoulder his responsibilities any longer, he was left with no option than to start up a business. With limited resources, the fair complexioned graduate saw opportunity in the business of selling recharge cards. After a while, the business started yielding profit.

Confronted with the increasing operating cost in running their business, the telecommunication companies raised the charges leading to many of the card retailers to close shop. But since Bolaji had little or no alternative, he remained in the business hoping that someday the business will return to its good old days. For those in the business, they were left with no choice than to transfer the cost to the hapless subscribers.

The situation may soon be repeating itself if the recent plan to introduce communication tax on voice calls, sms, MMS, Data and Pay TV by the Federal Government is anything to go by.

Although the bill to introduce the tax is still at the National Assembly, diverse reactions have, however, trailed the proposed action since it was announced. While some have argued in favour of the bill in the face of dwindling revenue to government, a large majority of consumers have condemned the plan, saying that it was an additional burden on struggling consumers.

A cross-section of consumers who spoke with Independent, expressed divergent views on the issue, as a large number of them were of the opinion that the bill, if passed into law would introduce additional burden on consumers who until recently were paying more for poor services.


The publisher of an online news portal, Brandish, Ikem Okuhu, while speaking on the issue, noted that government may have erred in coming up with such plan at a time when economic hardship was biting Nigerians. He explained that it was unnecessary to introduce another burden since it has just introduced stamp duty on banking transactions.

He said, “Tax is what every citizen should pay. It is necessity because government needs the money to be able to provide social services and infrastructure. Security is also included here.

“But I am worried that government might be over-taxing the people without at the very least, living up to their responsibilities.

“The economy is on its belly and that is not the time to impose heavy taxes on the populace.”

He added, “During low economic ebbs, what government does is to provide succour, not to increase taxes. But in Nigeria, under this government, we have seen taxes being imposed almost on every area. The CBN recently imposed stamp duty and others. There is also talk about increasing Value Added Tax among many others.

“In imposing communication tax, government may just be touching negatively on the area that the people are using to enable their business and social interactions and that is their voice calls and sms.


“It is absolutely wrong to make this happen. On what basis is government imposing communication tax? To make people talk a lot more or to discourage such conversations? When this tax is imposed, I am sure the people that will feel it more are the business people who would rather not make conversations out of fear of incuring expenses. It will slow down economic and social activity and the telecom companies, employing many people will also lose a lot of income. Such tax is an economic disincentive and should not be imposed at least during this period of economic slowdown.”

Aside consumers, operators in the telecom sector are already flaying the bill, insisting that it must not be allowed to stand. Quoting the executive secretary of the Association of Telecommunications Companies of Nigeria (ATCON), Ajibola Olude, in a recent report, he urged all relevant stakeholders to rally against the plan by ensuring that such bill is not foisted on Nigerians considering the additional pain and cost to be borne by consumers.

According to Olude, Nigerians are complaining about economic hardship, saying that imposing another tax on them will add to their burden and in effect, reduce communications growth.

“As far as we acknowledge that it is a trying period for the economy that is not to say that we should transfer the burden to consumers who are also strongly affected by the harsh economic status. Already, subscribers are already paying high for telecommunications services compared to what is obtainable in other countries. Aside this, telecommunication business will be largely affected because subscribers will reduce their interaction with telecommunications services and in turn affect the overall profits of service providers.”

However, some Nigerians have applauded the step, saying that it was the best decision at this critical time. Rather than challenge government reasons for initiating the plan, they urged citizens to demand accountability on whatever may be collected.

A marketing professional, Mr. Wale Okoya, who spoke with Independent, said it was a welcome step, especially in the face of dwindling revenue. He contended that it was the responsibility of citizens to pay tax stating that the onus lies with them to demand accountability on the part of government.

He said, “To be honest, I really don’t see any problem here. If we consider that government’s revenue has been on the decline in recent months, the drive to raise money through taxation becomes more understandable. As you must have noticed, government is doing a lot to ensure that more citizens and corporate bodies pay tax and sources of leakages are being blocked. For me, what is important is for government to utilise the tax collected wisely. I also believe that if the citizenry is able to perceive that the tax collected is not being wasted, they will gladly pay the tax. They will see it as a sacrifice for a better future. Most Nigerians do not like to pay tax. It is time for Nigerians to have a change of attitude. Rather than protest the proposed tax, activists should begin to organise and demand accountability on the part of government. The FOI law should be useful in this regard.”

Another consumer who supported the position of Okoya, Mr. Michael Tayo, said government truly needs to do something to raise revenue at this time. Although he admitted that Nigerians were not used to paying tax, he believes that with current situation of the economy and the absolute trust residing with this present government, he was sure that citizens would begin to comply.

The bill entitled “Communication Service Tax Bill, which was recently introduced by the Federal Government seeks to impose, charge and collect Communication Service Tax (CST) and will be levied on service fees payable by users of electronic communication services at 9 per cent and will be borne by the customers.

For instance, Section 2 of the bill listed the chargeable services to include, voice calls, sms, MMS, pay per view TV stations, data usage from telecommunication services providers and internet service providers.

While the Federal Inland Revenue Service (FIRS) will be responsible for the collection of the tax and its payment together with any interest and penalty into the Federation Account, the Federal Government will be responsible for the administration and management of the funds.

However, good as the intention of government in raising revenue may sound, introducing such tax may be too much a load to bear for consumers as they strive to manage their disposable incomes in this difficult period. It is hoped that government would rescind this decision by withdrawing the bill.