If the taxes are not harmonised, the nation’s target on Broadband penetration may not be realised in the long run, as this may make investment in the sector unattractive.
This is the view of the Minister of Communications, Barrister Abdur-Raheem Adebayo Shittu at a forum to exchange views on the tax system, especially as regards the proposed Communication Tax Bill, in Lagos.
According to the Minister, the introduction of new taxes without harmonising existing ones will be counter-productive unless both are juxtaposed.
According to a press statement by his Special Assistant on Media, Victor Oluwadamilare, the Minister said a section of telecom stakeholders have inferred that the Bill seeks to impose additional nine per cent charges on users of electronic communication services which is to be remitted to the Federal Inland Revenue Service on a monthly basis. More so, that the extra tax will be applied on voice calls, SMS, MMS, Data and Pay TV viewing, among other services.
Barr. Shittu, while echoing pundits’ views that over 60 million Nigerians would be unable to afford basic broadband connection, a situation that is likely to threaten Nigeria’s ability to achieve its goal of 30% broadband penetration by 2018 and also undermine the socio-economic progress spurred by increased connectivity, agreed that this will be a clog in the wheel of implementing the National Broadband plan.
He added that many have also concluded that the proposed Bill will also discourage further investment in the communication industry due to reduced Returns on Investment, and ultimately drastically reduce the sector’s huge contributions to the national GDP. Some have concluded that the proposed CST Bill is an ill wind that would blow the country no good.
Making his stance known, the Minister said: “My focus on any tax regime will be to align any process that will stimulate the economy and also ensure that the tax system is efficient by widening the tax net and creating an effective framework for tax compliance to protect the poor and vulnerable in the society who nonetheless have to use telecom services for social inclusion and financial services among others.
He however said that this Bill is discriminatory because it targets only the communication industry to the exclusion of other sectors of the economy. According to him: “They reckon, rather than overtax an already overburdened industry and its populace, government needs to stimulate the economy and encourage the adoption of communication service by all – whether rich or poor.”
Telecom analysts have however posited that the adverse effect of the Bill, if approved, will be that the cost will be passed down to consumers, which will mean higher cost of telecom services access.
They are also of the opinion that imposing such a tax will bring down the speed and level of infrastructure development at a time when infrastructure development has become key to broadband development in the country.