No AD

Telcos react as Nigerian government plans to impose tax on phone calls

May 24th 2022, 4:59:02 pm

This will be part of the sources of funds required to finance free healthcare for the Vulnerable Group in Nigeria

Election 2020: Telcos promise stable network on election day

Telecommunications operators in the country have faulted the newly proposed tax on phone calls by the Federal Government.

The telcos under the Association of Licensed Telecommunications Operators of Nigeria (ALTON) said the decision was contrary to the position the government recently took when they (the operators) announced plans to increase tariffs because of the high cost of diesel powering their base stations.

No ad

According to the Chairman of ALTON, Engr. Gbenga Adebayo, telecom subscribers will bear the brunt of the new tax because they will now get less value for what they pay for. He adds that the operators will have no choice but to start deducting the tax from the subscribers’ recharge once mandated by the government.

Reacting to the new tax, the ALTON Chairman said: “For us as at ALTON, it is bad fate on the part of government and I think it is badly intended. This is because when we came out that the government should look at our cost of operations and give us a room to review tariffs, everybody treated us like outcast.

“The same government is now coming in a matter of days to say they are introducing new taxes. So, if we cannot review based on the impact it will have on subscribers, why are they bringing in another tax, still on subscribers. Government cannot act in one way and say another thing.

No ad

Adebayo added that tax could be introduced to another service, not a service that is so live-impacting like telecommunications. “The reason for it is understandable, but we think it can be sourced from other sources, not telecoms subscribers, whom the government itself has said are suffering because of the high cost of living lately. We will not complain as operators because we will definitely remit, it is the subscribers that will bear the brunt. I say again that for us to have a sustainable industry, we must price right. Government cannot escape from this responsibility for a long time,” he said.

Last week, President Muhammadu Buhari imposed a telecom tax as he signed the National Health Insurance Authority Bill 2021.

The act includes a provision under Section 26, subsection 1c, which states that the source of money for the Vulnerable Group Fund includes telecommunications tax, not less than one kobo per second of GSM calls.

The Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers, Taiwo Oyedele, said, “S.26 of this new law imposes a telecommunications tax of not less than 1 kobo per second on GSM calls. With call rates at about 11 kobo per second, this translates to a nine per cent tax on GSM calls.”

According to the new law, this will be part of the sources of funds required to finance free healthcare for the Vulnerable Group in Nigeria.

The Vulnerable Group Fund is money budgeted to pay for the health insurance of vulnerable persons in a bid to subsidise the cost of provision of healthcare services to vulnerable people in the country.

The law defines the vulnerable group in society as Children under five, pregnant women, aged, physically and mentally challenged persons, and indigent people as may be defined from time to time.

JOIN OUR PULSE COMMUNITY!


Our newsletter gives you access to a curated selection of the most important stories daily.
No AD

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng