Fearing the likely negative impact of the proposed telecommunications tax bill on a large chunk of telecoms subscribers and the economy as a whole, the Association of Telecommunications Companies of Nigeria (ATCON), the umbrella body for all telecoms companies in the country, has advised the Senate to reconsider its stand on the proposed legislation.
President of ATCON, Mr. Olusola Teniola gave the advice in a detailed presentation on the negative impact of the bill to the Senate President, Senator Bukola Saraki in Abuja recently.
He urged the Senate to revisit the proposed bill and reduce it from 9 per cent tax increase to 1 per cent tax increase.
According to Teniola, the bill, if eventually passed into law, would exclude 10 per cent of the population of telecoms subscribers, which is over 20 million, from getting access to telecommunication services.
Teniola explained that whereas the survival of the Nigerian economy will is about attracting more citizens to gain access to internet and telecommunications services, the bill would cut down on access to Information and Communications Technology (ICT) services.
Members of Senate and the House of Representatives, are seriously pushing for the passage of the bill, which had since scaled through the first and second readings.
Their intention about the planned bill was to raise telecommunications taxes, in order to generate more revenue for government.
Although the telecoms operators understood the need for government to generate more income in order to provide better infrastructure for the good of the masses, they are however of the view that the operators are over burdened with all manners of taxes and levies from the government circle and that additional levies and taxes may crash telecoms activities in the country and spell doom for the industry.
Unfolding the feelings of telecoms operators during his presentation, Teniola said: Our mandate is to support the federal government to succeed in attracting and protecting investments in the telecommunications industry and to make meaningful input to all aspects of economic development including legislation and management of our industry so it continues to be the oil of growth and development. However, the planned introduction of the 9 per cent Communications Tax Bill, as source of revenue generation for government, will be counter productive to operations of the telecoms sector.”
The ongoing work on the proposed 9 per cent Communication Service Tax Bill is a trending subject. We would be happy to support government to make the best of our tax efforts which certainly are key components of strengthening the economy and sustaining our industry. Contrary to uninformed opinions we do not object to reforms in taxation neither do we regard taxes as burden, Teniola said, adding that there is severe pressure at these times and government revenue cannot be different. We however pray that the template with which the telecom industry is viewed and assessed be slightly modified.
“The truth is that there is severe over taxation in our industry. It explains the slow penetration of services into unserved areas of the country. The truth again sir is that contrary to popular belief, telecommunication operators and service providers are barely sustaining existence in these times,” Teniola said
There are reasons to suggest that the desire to widen the tax net is laudable and that as things stand, telecommunications is about one of the few areas where the net-capture may be widened. We therefore suggest that an increase in VAT tax, which is already included in all services of telecommunications, that is not beyond 1 per cent, should be a good reform strategy, he added.
Giving reasons for the slow internet penetration in the country, Teniola said the reality of internet access in Nigeria is that it’s all about mobile. Only about 13 per cent of Nigerians get broadband access via mobile while less than 1 per cent does from fixed services.
According to him, one of the main reasons the rate of internet adoption and use is rather slow in Nigeria is the high cost of data subscription, even as he argued that a 500MB plan costs typically 5.4 per cent of average monthly income, and that the current definition of affordability used by the UN Broadband Commission, is where the price of a broadband plan is less than 5 per cent of average monthly income. If we are to use this definition Nigeria is on the cusp of affordability.
We therefore recommend, as33333, a tax reform that increases the current VAT by a new 1 per cent added for the purpose of development of communications, and not 9 per cent, Teniola advised.