The plan by the National Assembly to hike communications services tax also known as Information and Communications Technology (ICT) tax, will prevent over 50 million Nigerians from being able to afford a basic broadband connection, a situation that will also deny them internet access, the Alliance for Affordable Internet (A4AI)-Nigeria Coalition, has said.
Analysing the proposed nine per cent tax to be levied on consumers of communications services, A4AI-Nigeria coalition, said it would cause nearly 50 million Nigerians great challenge to afford a basic broadband plan.
The analysis suggests that the passage of such a tax is likely to threaten Nigeria’s ability to achieve its goal of 30 per cent broadband penetration by 2018 and will undermine the socio-economic progress spurred by increased connectivity.
The Communication Service Tax (CST) Bill 2015, currently before the National Assembly, will require consumers of voice, data, short message service (SMS), multimedia message services (MMS) and pay TV services, to pay nine per cent tax on the fees paid for the use of these services. The tax will be collected in addition to the five per cent Value Added Tax (VAT) that consumers already pay when they purchase devices and communication services, as well as the 12 per cent custom import duties paid on ICT devices, and the 20 per cent tax levied on SIM cards. Mobile operators and service providers will be responsible for collecting consumer payments and must fulfill additional reporting obligations that are likely to increase operational costs and service fees for consumers.
Increasing access to and use of the Internet and communication technologies is central to Nigeria’s development agenda.
“Though Nigeria can currently claim to have some of Africa’s most affordable internet prices such as 500MB priced at 5.4 per cent of average income in 2014, broadband penetration still stands at just 12 per cent. The reality is that 40 per cent of Nigerians earn less than half of the average income; this means that a basic mobile broadband plan actually costs the majority of Nigerians anywhere between 7-18 per cent of their monthly income. The addition of this tax would increase the cost to connect across board, with women and low-income populations likely to be the hardest hit,” the A4AI-Nigerian Coalition said in a statement.
Commenting on the proposed law, National Coordinator for A4AI-Nigeria Coalition, Dr. Ernest Ndukwe, said: “Balanced fiscal policy must consider affordability of broadband and ICT, and should not put into place additional barriers that will make internet access unaffordable to hundreds of millions of Nigerians. Nigeria is far behind the more developed countries of the world when it comes to broadband use, and the introduction of the CST will only widen this gap.”
Ndukwe called on the National Assembly members to reconsider the passage of the CST and its impact on the development of broadband in Nigeria. According to him, “after such review, if the introduction of a CST is deemed an absolute necessity, it must consider a lower tax rate than 9 per cent, one that would enable it to achieve fiscal revenue targets without undermining broadband affordability and access.”
A4AI, Nigeria brings together prominent players from private and public sectors and civil society to provide a unified approach and coordinated focus in addressing the shared goal of open, affordable access to the Internet in the developing world.
A4AI ranks as the world’s broadest technology sector coalition with the desire for everyone, everywhere, to be able to access the life-changing power of the Internet affordably.
Its goal is to achieve the United Nation Broadband Commission target of entry-level broadband priced at less than five per cent of monthly income, thereby enabling billions more people to come online.