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Thursday, May 19, 2016

9% telecom service tax: 50m Nigerians may be denied access – Ndukwe warns

The National Coordinator, Alliance for Affordable Internet (A4AI)-Nigeria Coalition, Dr. Ernest Ndukwe, has warned that an estimated 50 million Nigerians may be denied access to affordable basic broadband connectivity if the proposed Communication Service Tax (CST) Bill 2015 otherwise known as electronic services (eServices) tax of 9 per cent, before the National Assembly, reports ITRealms.
A press statement endorsed by Dr. Ndukwe, who was a former Executive Vice Chairman (EVC), Nigerian Communications Commission (NCC), posited that the bill if passed will widen the digital divide and slow down the level of investment in the telecommunications sector and affiliate industries.
According to him, the Communication Services Tax portends more danger than good for the Nigerian telecommunications consumers, beginning with denying of access to the populace, particularly access to information through the internet.
Taxing telecom consumers, he said, would definitely put rise to the cost of connection to the internet thereby denying the defenseless groups especially women, access to internet.
“Balanced fiscal policy must consider affordability of broadband and ICT, and should not put into place additional barriers that would make internet access unaffordable for hundreds of millions of Nigerians. Nigeria is far behind the more developed countries of the world when it comes to broadband use, and the introduction of the CST will only widen this gap. The National Assembly must reconsider the passage of the CST and its impact on the development of broadband in Nigeria. After such a review, if the introduction of a CST is deemed an absolute necessity, it must consider a lower tax rate than nine per cent: one that would enable it to achieve fiscal revenue targets without undermining broadband affordability and access,” Ndukwe advised.
A4AI recollects that before now analysis has shown the proposed nine per cent tax to be levied on consumers of communications services would result in an additional 10 per cent of the population — equivalent to nearly 20 million Nigerians, being unable to afford a basic broadband access. The analysis suggested that the passage of such a tax is likely to threaten Nigeria’s ability to achieve its goal of 30 per cent broadband penetration by 2018 and undermine the socio-economic progress spurred by increased connectivity.
The CST Bill, seeks consumers of voice, data, short message service (SMS), multimedia service (MMS) and pay TV services to pay a nine per cent tax on the fees paid for the use of these services. This tax would be collected in addition to the five per cent Value Added Tax (VAT) that consumers already pay when they purchase devices and communication services, the 12 per cent import duties paid on ICT devices, and the 20 per cent tax levied on subscriber identity module (SIM) cards.

ITRealms gathered that mobile operators and service providers will be responsible for collecting consumer payments and must fulfill additional reporting obligations that are likely to increase operational costs and therefore service fees for consumers.
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