Communication Service Tax Bill Against the Poor

By Chukwudi Ehileogu


Consumer rights advocates and stakeholders in the telecommunications industry have risen against the proposed Communication Service Tax (CST) Bill, which is being debated by the National Assembly. Promoters of the Bill seek to impose on communication service users 9 per cent service charge for electronic communication service, including voice calls, short message service (SMS), multimedia service (MMS), data usage and Pay TV. The Bill, if enacted into law, will also mandate the service providers to file monthly tax return with the Federal Internal Revenue Service (FIRS) with strict penalties for non-compliance.


Kunle Obembe, a consumer rights campaigner and member of the League of Consumer Advocates, said the new Bill would amount to nothing but multiple taxation of the consumer who are already agonising over the current harsh economic condition. “The National Assembly ought to realise that whichever way it looks at the CST Bill, it will add more pressure to the purchasing power of the communication service user and lead to possible increase in charges by the service providers.”


He alluded to the comment by the  Chief Executive Officer of Airtel Nigeria, Segun Ogunsanya that the planned tax bill would lead to increase in call charges resulting in less minutes of use on the networks.


Hassan Tukur, an Abuja-based consumer rights activist, appealed to right-thinking members of the National Assembly to reject the proposed Bill in its entirety. He said it would serve no purpose except to shore up the revenue base of the government at the expense of the socio-economic life of the people.  He further said: “The proposed Bill is not in the interest of the poor and vulnerable in the society who required incentives for social inclusion, which is what access to communication services provides.”


According to a PwC Nigeria report on the proposed Bill, the consideration of the CST reflects the Federal Government’s appetite to increase revenue through taxes. The world renowned audit firm said: “However, the introduction of new taxes without harmonising existing ones will put pressure on the Nigerian tax system which will be unattractive to investors. It may also be counter-productive in the long run for targets on broadband penetration. The focus instead should be on stimulating the economy and ensuring that the tax system is efficient by widening the tax net and creating an effective framework for tax compliance.”


Telecommunications groups worldwide have also kicked against the CST Bill given that multiple taxation already exists in the information telecommunications industry in Nigeria. These include IT Tax on Profit, Annual Operator Levy on Turnover, VAT on consumption of their services and sundry taxes and levies by state and local government authorities.


Recently, a petition was submitted to the Nigerian government by the Global System for Mobile Communication Association (GSMA), Association of Licensed Telecommunications Operators of Nigeria (ALTON), the Association of Telecommunications Companies of Nigeria (ATCON) and the National Association of Telecommunications Subscribers (NATCOMS). They all rejected the Bill as it would lead to increase in prices for consumers and be counter-productive to the longer term national digital strategy objectives set by the Federal Government.


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