By Adebayo Obajemu
The controversy over the tax on call, message and data seems to be deepening with ministers of this government disagreeing with the policy of government. This may stem from government desperation to raise revenue from non oil sectors, which is driving it to take unilateral actions.
The highlight of the controversy is the admission by the minister of Communications and Digital Economy, Isa Pantami that he was not consulted before government went public with the tax regime recently announced by the federal government, and therefore, unacceptable.
Already, two ministers have publicly disagreed on the issue, thus creating uncertainty in its implementation, and showing government as divided and uncoordinated.
Pantami spoke against it last week to express his opposition, while the minister of Finance, Mrs. Zainab Ahmed, who announced the policy as part of the new finance law, has continued to urge Nigerians and the stakeholders to support the tax.
Pantami had made a scathing condemnatory remark at the maiden edition of the Nigerian Telecommunications Indigenous Content Expo in Lagos last Monday.
He promised to use every legal instrument available to fight the decision.
According to him, the decision did not pass the test of time and rigour, adding that there was absence of wide consultation, saying that if the decision was allowed to stand, it would affect the sector negatively.
According to him, prior to the new tax regime, the sector, which was already enjoying monumental revenue, creating jobs and adding huge revenue to the GDP, and given this reality, should not be over burdened with such taxes.
“The five per cent excise duty will over burden the industry. As a Minister, I was neither consulted nor received a memo to that effect.
“Even the relevant lawmakers that were supposed to be consulted have also told me they were not. Things are not done that way.
“Besides criticising the tax, we will take every legal measure to ensure the tax does not stand.”
Pantami condemned the huge percentage of importation of ICT and telecoms equipment into the country, given the fact that such items could be obtained in the country.
He announced that going forward, the federal government would not allow that kind of situation to fester.
“Henceforth, the Federal Government will not tolerate importation of anything into the country when we have the capacity to produce it. The sector has to significantly reduce importation.
“The Nigerian Communications Commission and the National Office for the Promotion of Indigenous Content should enforce this policy.
“By 2025, we’ll be able to increase our indigenous content and reduce importation by about 20 per cent.”
The new five per cent Excise Duty is part of the new Finance Act signed into law by the President in 2020.
Nothing demonstrates the dysfunction in the Buhari administration than the disjointed voices coming from government. The minister’s position contradicts the position of the minister of Finance, Ahmed Zainab.
At the same event where Pantami voiced his opposition to the tax regime, Ahmed, had urged stakeholders to support the implementation of the new tax regime, saying the decision was informed by the dwindling revenue of the federal government from oil and gas.
She stated that other countries in Africa, including Malawi, Uganda and Tanzania, among others, have all keyed into the revenue generation pattern.
Speaking on the matter, Professor Adeagbo Moritiwon, a political scientist said “the fact that two top government officials have taken divergent positions on the same issue shows the dysfunction in the Buhari administration.
“This administration is run by a series of cabals at different levels, at informal levels, this has created policy hiccups and dysfunction. Imagine the minister of Communications and Digital Economy saying he was not consulted on a policy that affected his ministry. This is ridiculous.”
According to the Finance Act, the new tax on calls, messages and data is meant to be collected by the Nigerian Customs Service.
Already, President Buhari has ordered that it be enforced on all telecoms service providers in the country and on all local and foreign goods and services; in spite of the controversy.
Meanwhile, stakeholders in the industry have expressed dissatisfaction over government’s resolve to implement five per cent excise duty on all telecommunications services in Nigeria.
Last week in Abuja at the Stakeholders Consultative Forum on Implementation of Excise Duty, the Executive Secretary, Association of Telecommunications Companies of Nigeria (ATCON), Ajibola Olude, told the media that taking into consideration the untold suffering in Nigeria at the moment, the government should not have taken the decision to implement the five per cent excise duty on telecommunications operators.
He said, rather government ought to have looked at how to divert its resources to other sectors to diversify the economy.
“What I am saying is that the proposed excise duty on all telecommunications companies is badly intended by the Ministry of Finance and National Planning and Nigeria Customs. And the current state of Nigerian communication is so bad that only about 756 Internet Service Providers (ISPs) were registered but only 10 is active because of issues of forex.
“Since it is coming from the Ministry of Finance, I think they should understand that currently Nigeria is faced with inflationary pressure, which is 18 per cent now. If you add this increase, the level of inflationary pressure will come to 19 or 20 per cent.
“And this will further increase the level of poverty in the country. So, if you are going to pass this to Nigerians that are already burdened by the hardship in the country, this is not the best time to do so.
“For me, it is not something they should embark upon. It is something they should turn down and leave the country as it is. Nigerians won’t be able to pay this.
“And another direct effect is that it will lessen investment. As a matter of fact, the Foreign Direct Investment (FDI) or Capital Importation will go down because this is a further leakage. It is not just good and I think the best thing the government should do is to develop other sectors.
“They have been collecting tax from the people, they should channel it to steel industry, manufacturing and so many other sectors. That is diversification of fund. It is not something they should implement now. They should consider it and change their decision,” he said.
Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, in his own take, foresees increased burden on the part of subscribers, adding that the new tax burden would invariably be passed to subscribers.
According to him, “it is a strange move, it appears a bit unusual. Excise duty is supposed to be apportioned to goods and products, but we are surprised this is on services.
“We will continue to support government but ALTON won’t be able to subsidise this on behalf of subscribers in addition to the 7.5 per cent VAT, making it 12.5 per cent payable by subscribers to the Federal Government.
“We currently pay a lot of taxes, running into 39 of them, so we can’t add more to the existing burden. We won’t be able to absorb this on behalf of subscribers.”
At the event last week, Zainab Ahmed, who was represented by the Assistant Director, Tax and Policy, Mr. Musa Umar, appreciated Nigeria Communications Commission (NCC) for providing the platform to increase Nigeria’s revenue generation.
She averred that “The issue of revenue is not something we need to shy away from, our revenue can no longer take care of our needs as a country. Also, Nigeria is no longer making enough money in oil revenue, hence the attention is shifting to non-oil revenue sectors, he said.”
The Minister explained that the government is committed to implementing the regulation in a seamless manner, which will not affect Nigerians.
Executive Vice Chairman, NCC, Prof. Garba Umaru, represented by the Executive Commissioner, Stakeholders Management, Adeleke Adewolu, said that the gathering was to engage industry stakeholders and Federal Government agencies on the implementation of excise duty to ensure the framework address the Nigerian telecommunications sector.
“The Commission is here to ensure that the Federal Government implements this initiative, which will help the government to fund the national budget,” he said.
Also, an Assistant Director and Chief Administrative Officer in the Ministry of Budget and National Planning, Frank Oshanipin, said the move to implement the five per cent excise duty was due to dwindling oil revenue.
“We are not making as much revenue as we are supposed to make and that is why we are channeling our attention to non oil revenue. What we are doing here today is the best thing that can happen to our country.
“We are trying to see how we can implement the five per cent excise duty in a way it will not affect any of us,” he said.
Dr. Olufemi Omoyele, director of Entrepreneurship at Redeemers University, said government “has not really shown enough sensitivity to the plights of Nigerians.
“I’m really baffled at how this administration thinks. APC came to power on the platform of change, yet it has continued to add more and more burden to the suffering of the citizens. This is sad. In the coming election, Nigerians should think deep when they want to vote.”