Minister Kicks against Planned Implementation of 5% Excise Duty in Telecom Sector

Emma Okonji

The Minister of Communications and Digital Economy, Dr. Isa Ibrahim Pantami, yesterday rejected the planned implementation of five per cent excise duty in the telecom sector.

Pantami expressed his disapproval for the policy at a telecom forum in Lagos, organised by the Nigeria Office for Developing the Indigenous Telecoms Sector (NODITS), an agency domiciled in the Nigeria Communications Commission.

He said he would explore every legitimate means to stop the planned five per cent excise duty tax on telecom consumers.

The federal government through the Ministry of Finance, had last week in Abuja, disclosed that it would begin the implementation of five per cent excise duty tax on all voice calls, SMS and data services, in addition to the existing 7.5 per cent Value Added Tax (VAT), paid for goods and services across all sectors of the economy.

Government made the disclosure on five per cent excise duty during a stakeholders’ meeting, organised by the Nigerian Communications Commission (NCC), the telecoms industry regulator.

At that meeting, the Minister of Finance, Zainab Ahmed, who was represented by the Assistant Director, Tax Policy, Federal Ministry of Finance, Budget and National Planning, Musa Umar, said: “The five per cent excise duty has been in the Finance Act 2020 but has never been implemented. Henceforth the five per cent excise duty will be collected by telecom operators and payment made to the federal government on a monthly basis, in or before 21st of every month.”

Pantami, faulted the timing and process of imposing the tax on the telecom industry, insisting that part of the responsibility of a responsive government was not to increase the challenges citizens were facing.

He maintained that he was not in support of five per cent excise duty.

“I have not been contacted officially. If we are, we surely will state our case. The sector that contributes to the economy should be encouraged. You introduce excise duty to discourage luxury goods like alcohol, but broadband in the telecom sector is a necessity.”

“If you look at it carefully the sector contributes two per cent excise duty, 7.5 per cent VAT to the economy and you want to add, more to create additional hardship. This cannot be tolerated at this time and it will be resisted,” Pantami said.

He urged the tax masters to expand the scope of other sectors not contributing to the economy to do so.

“We must come together and salvage the sector. Only telecom sector contributed 13 per cent and you want to add more. This is unacceptable,” Pantami said.

Pantami who also faulted the lawmaking process that produced the harsh tax, said the Chairman of the House Committee on Communications, was not aware of such tax and that it must be re-enacted for the benefit of telecom subscribers, the telecom industry and the Nigerian economy.

Pantami was of the view that further tax on the sector would impact negatively on its contribution to the country’s Gross Domestic Product (GDP).

“We will explore other means to reverse it. As a minister, based on the provision of the Constitution of Nigeria, Section 148, we are exercising powers of Mr. President. That is what the constitution says. At least, I am a major stakeholder, when VAT was increased to 7.5 per cent, I was not consulted on the five per cent excise duty.

“I only heard the announcement and I think there is something questionable and I am glad that we are on the same page with our National Assembly members that are here.

“They have not been consulted and they are part of the committees. So, may be beyond making our position known, we would go behind the scene and go against any policy that will destroy the digital economy sector. This is a sector, which we cherish and we will go any length to legitimately and legally defend its interest,” Pantami added.

On his part, the Chairman of the Association of Licensed Telecom Operators of Nigeria (ALTON), Gbenga Adebayo, insisted that the new tax burden would be passed to subscribers if the federal government should implement it.

Adebayo said: “It is a strange move; it appears a bit unusual. Excise duty is supposed to be apportioned to goods and products, but we are surprised this is on telecom services.

“We will continue to support government but ALTON will not be able to subsidise this on behalf of subscribers in addition to the 7.5 per cent VAT, making it 12.5 per cent payable by subscribers to the federal government.

“We currently pay a lot of taxes, running into 39 of them, so we can not add more to the existing burden. We will not be able to absorb this on behalf of subscribers.”