The federal government has come under severe criticism as it pushes to introduce the Communication Service Tax (CST) bill from which it intends to rake in N20 billion monthly.
Speaking on a television programme monitored by News Gazette in Lagos, the head of tax at Price Water House Coopers Nigeria, Mr. Taiwo Oyeleye described as “unrealizable” the N20 billion projected revenue which the federal government hopes to earn when the bill is passed by the national assembly.
The extra tax, according to the minister of communications, Mr. Adebayo Shittu, will be applied on voice calls, short message services (SMS), multimedia messaging service (MMS), data and pay television viewing, among other services.
According to the bill, 70 per cent of the tax will be paid into the federation account, while 30 per cent of will go into social security.
Communication service providers will collect the tax from the subscribers and remit to the Federal Inland Revenue Service (FIRS) on a monthly basis.
Oyeleye explained that the government’s N240 billion yearly projection is a mirage adding that the N72 billion from 30 per cent set aside for social security is a drop in the ocean considering the size of the population.
He said the tax would be borne by the consumers while the service producers would be under pressure t collect and remit same to the federal government.
He said the impact of the tax would depend on the ability of the consumers to pay for the service.
“Revenue accruing to telecom companies will reduce for consumers will scale down the use of telecommunication services. Invariably, it will affect the expected N20 billion monthly revenue target. There will be a reduction in the demand for MMS, SMS, voice calls and data. And service providers will be under pressure,” he said.
On his part, the president of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Olusola Teniola, said the association is against the moves by the federal government to introduce the tax.
“ATCON believes any calculated actions that have potentials to stifle further contribution of the telecoms industry to our gross domestic product must be avoided by all tiers of government in Nigeria as the perceived benefits of imposing a CST on telecommunications subscribers has the potential to erode if not destroy the achievements that have been made since the telecoms sector was liberated. We therefore advise both the House of Representatives and the Senate (the Legislative arm of government) to discontinue with the bill,” he said.
Equally, the Trade Union Congress condemned the planned tax and advised the national assembly to reject the bill.
The president of TUC, Mr. Bobboiu Bala Kaigama said “if we sufficiently understand the minister, we wonder how he expects such tax to be paid by any worker in a country where the national minimum wage is N18,000 and at a time when workers’ take home pay no longer takes them home.”
Apart from exploiting the already impoverished masses, Kaigama said the policy would also discourage investment and lead to loss of jobs.
“The congress faulted the minister’s claim that the country would earn as much as N20 billion monthly in consequence of passage of the proposed bill and that it would help cushion some of the country’s economic challenges and fund budget deficits.
“While we appreciate the minister’s concern on how to fund the budget, should the government’s focus not rather be on ensuring more judicious use of revenue derived from Value Added Tax (VAT), Pay-As- You-Earn (PAYE), stamp duties, vehicle licenses, passport fees, customs duty, petroleum profit tax (PPT) and other taxes collected from the masses and companies? And would it not be more appropriate for the desired additional taxes to be imposed on the GSM operators and other players in the communications industry rather than the poor masses?”
“It is unfortunate that the minister is evidently interested in monetary gains from the communications sector to the detriment of the welfare of Nigerians. If various tiers of government aim to increase their revenues, they must start by looking inward to the vast deposits of natural resources within their respective jurisdictions,” he said.