Proposed mobile phone call tax irks Nigerian consumers
Government sees plans to impose 9 percent tax on communication services as means to make revenue amid falling oil prices
By Rafiu Ajakaye
LAGOS, Nigeria
Plans to impose a 9 percent tax on mobile phone calls, Internet data and text messages, seen by the government as a means to make revenue amid falling oil prices, have Nigerian consumers feeling cheated.
In his 2016 budget speech, President Muhammadu Buhari hinted at possible tax hike, saying "non-oil revenues” would add 1.45 trillion naira (around $4.6 billion) to Nigeria’s $19.29 billion budget. A bill including the new tax is now on its way through the House of Representatives.
Timothy Adewale, spokesman for the pro-poor civic group Socio Economic Rights and Accountability Project (SERAP), urged the president to abandon the proposed tax, arguing that it would exacerbate poverty.
"We call on the president to immediately drop the proposed 9 percent tax on phone calls, text messages, data and more, as this would disproportionately affect the socially and economically vulnerable and push them deeper into poverty and deprivation," Adewale said.
"The economic recession is devastating lives and livelihoods across the country, and quickly translating into rising unemployment among Nigerian youths, hunger and powerlessness," he added.
According to a recent United Nations report, 64 percent of the country's 80 million population lives below the poverty line.
Despite the high poverty lines, mobile telephone subscribers in Nigeria currently stand at 152 million. This figure is expected to hit 182 million by 2019, according to Nigeria Communications Commission.
- Telecom bodies slam move
There are five major licensed GSM providers in the country, including MTN, Airtel Nigeria, Glo Mobile, Visafone and the Etisalat, while the mobile telecom market is estimated to be worth $10 billion by 2020, according to a recent study by Pyramid Research, an international consulting firm.
The Association of Licensed Telecommunications Operators of Nigeria, Association of Telecommunications Companies of Nigeria and the National Association of Telecommunications Subscribers too have rejected the proposed tax bill.
“Such tax will result in an increase in prices for consumers, have adverse impacts on the adoption of mobile services and industry investment, and be counter-productive to the longer term national digital strategy objectives set by the government,” the associations said in a joint letter, which was recently sent to the country's communication and finance ministries.
- Nigerian public unimpressed
Beyond concerns by telecom industry players is the seething anger by Nigerians against the proposed tax. An earlier attempt by Abuja to raise value-added tax from 5 to 10 percent was greeted by public outrage, leading officials to drop the idea, at least for now.
Coming a few months after the government introduced a 50 naira ($0.16) levy on every deposit (above 1,000 naira or $3.2) into current accounts, citizens dismiss the proposal as insensitive at a time the economy was said to be in recession and consumers’ purchasing power badly hit. The dollar currently exchanges at 305 at the official interbank market; the black market rate - the most realistic - stands at around 410. This has resulted in 17.6 percent headline inflation, with the price of consumer goods hitting the roof.
When the government launched the #ChangeBeginsWithMe campaign last Friday, the message was met by widespread cries of citizens to let the change, or belt-tightening, begin with cutting expenses of officials.
Wale Fatade, a public commentator, said: "Good enough that Nigerians are saying no to this insensitive bill and with things as difficult as they are now, the best our government could come up with is this tax without thinking of its repercussions.
"Hopefully, the national assembly will, for once, show that they care for Nigerians by throwing out this bill."
Atiku Samuel, head of research at the civic accountability organization BudgIT Nigeria, says the government was going about the drive in the wrong way.
"Consumer spending is down and under threat by inflation," according to him. "The economic is in recession, and government's job is to boost aggregate demand and [then] use tax to stiff it dry," he added.
- 'Tax necessary'
Proponents of the tax hike, however, claim the current tax rate is the lowest in the West African region.
Communications Minister Adebayo Shittu said the tax was necessary to build a solid communications infrastructure, although his office told Anadolu Agency last week that “stakeholders are still meeting to harmonize” positions on the bill to address concerns already raised, including its impact on efforts to deepen connectivity.
Presidential spokesman Garba Shehu said the government was doing everything to mitigate the impact of the economic situation, including cutting cost and selling off public properties such as the presidential aircraft to raise funds.
Victor Oluwadamilare, spokesman for the communication minister, told Anadolu Agency “nothing has been concluded” on the tax issue because “further consultations with all stakeholders are being scheduled.”
Economist Tunji Andrews told Anadolu Agency there was nothing wrong with the tax, adding it was "not entirely new".
"I know that the popular thing to say is 'not now', but taxes are taxes, recessions can't change this," according to him.
"I do hope that the federal government reviews the overall tax burden of Nigerians and find ways to give tax breaks, but I don't think there's anything wrong with this tax," Andrews added.
