2% Tax on Telephone Calls will Stifle Telecom Growth, Telcos Insist

Emma Okonji

The Association of Licensed Telecom Operators of Nigeria (ALTON) has reacted to the alleged planned introduction of two per cent tax on all telephone calls by the federal government, insisting that it would stifle growth in the sector.

The telco tax, which is in the equivalent of a minimum of one kobo per second for phone calls, is part of the sources of funds required to finance free healthcare for the vulnerable group in Nigeria, according to the National Health Insurance Authority Bill 2021 signed by President Muhammadu Buhari last week.

ALTON chairman, Gbenga Adebayo, who spoke to THISDAY in a telephone chat, said telecom operators were yet to get any directives from government to implement such levy, even though the news has spread far and wide that government is about to introduce another tax on telecom operations.

Telcos currently charge N4 for SMS and N6.40k per minute for all voice calls that terminate on other networks.

According to Adebayo, “We are yet to receive the official directive, but if it is true that the federal government wants to tax all telephone calls by two per cent, we will be surprise that such tax will be coming at this time.

“The reason being that when we recently suggested to our regulator to review the current economic indicators that are affecting telecoms business, with a view to increase cost of telecoms service delivery by 40 per cent, in order to cushion the economic effect on telecoms operators, government said it was not an appropriate time to review cost of telecom services delivery, given the difficult times that Nigerians are passing through. So we will be surprise if the same government now comes around to say it is introducing two per cent tax on telephone calls.”

So if this is true, what is the moral basis to introduce two per cent tax on telephone calls and expect us to collect such money and remit to government, when it has refused to support our request for the review of the cost of telecom services delivery across networks, Adebayo asked.

But the National Health Insurance Authority (NHIA) has said the new National Health Insurance Authority (NHIA) Act recently signed into law by President Muhammadu Buhari does not make provision for a telecoms tax as a source of funding in the law.

In a statement on Monday, signed by the Public Affairs Manager of the NHIA, Emmanuel Ononokpono, it said the Act establishes and empowers the NHIA to ensure the provision of health insurance for all Nigerians through a mandatory mechanism, in collaboration with state health insurance agencies.

While clarifying the provisions of the new legislation, the agency said: “In relation to the Act, the NHIA wishes to state clearly that the legislation that Mr. President assented to does not make provision for a telecoms tax as a source of funding in the law contrary to hasty reports in some exuberant national media.”

The NHIA said with the coming into effect of the new Health Insurance Act, the objective of addressing high incidence of out-of-pocket expenses for health care, through health insurance for all categories of Nigerians by 2030, would now be more realisable than ever before.

The statement added: “It worthy to note that the Act establishes and empowers the NHIA to ensure provision of health insurance for all Nigerians through a mandatory mechanism, in collaboration with state health insurance agencies.

“Specifically, Sections 25 and 26 of the Act establish the Vulnerable Group Fund (VGF), indicating the various sources from which funding would be drawn.

“Furthermore, the legislation strengthens the NHIA to discharge a wide range of regulatory and promotion functions to ultimately ensure that every Nigerian receives access to quality and affordable health care.