LCCI: N90b Telecom Tax Will Increase Cost of Doing Business

Dike Onwuamaeze

The Lagos Chamber of Commerce and Industry (LCCI) has stated that the new telecom tax in Nigeria meant to raise N90 billion revenue annually as contained in the new National Health Insurance Authority Act 2021, would worsen the cost of doing business in Nigeria by compelling subscribers to pay more for telecom services.

The LCCI raised this point yesterday in its press statement on the New Telecom Tax in Nigeria, and tasked the federal government to create a regulatory environment that would minimise disruptions to telecoms companies’ operations in the country and enable enterprises to invest more in telecoms infrastructure for a thriving digital economy.

The statement which was signed by the Director General of the LCCI, Dr. Chinyere Almona, said: “The recently signed National Health Insurance Authority Bill 2021 that replaced the National Health Insurance Scheme Act, 2004 by President Muhammadu Buhari, places a new telecoms tax equivalent to a minimum of one kobo per second on phone calls by subscribers.

“The realised funds, estimated to be about N90 billion yearly, are meant to finance free healthcare for the vulnerable groups – children under five, pregnant women, the aged, and physically and mentally challenged Nigerians.

“The implications of all of these are that subscribers will be made to pay more for telecom services. And companies that depend heavily on the telecommunication infrastructure to deliver their services will likely begin to incur an additional cost burden even as they currently struggle to comply with about thirty-six different taxes.”

The statement recalled that due to the rising cost of operations, telecom companies under the Association of Licensed Telecommunication Operators of Nigeria (ALTON) have put a plan in place for a proposed 40 per cent increase in the cost of calls, SMS, and data in the coming weeks.

It, therefore, called on the federal government to create “a regulatory environment that promotes enterprise—investing more in telecoms infrastructure for a thriving digital economy and minimising the disruptions to telecoms companies’ operations while enforcing tax compliance.”

The LCCI also tasked the government to ensure that revenues realised from the telecom tax “must be well managed to achieve the objective of the tax. A fair and transparent system is critical in identifying the ‘vulnerable group’ that qualifies for the Vulnerable Group Fund.

“The N876 billion allocation to health in the 2022 federal budget is 5.1 per cent of the total budget and lower than the 15 per cent minimum allocation as agreed in the Abuja Declaration of 2001. Nigeria’s health sector requires and deserves more allocation considering the state of healthcare delivery in our nation today.”