Telecommunications operators in Nigeria now pay over 40 different taxes and levies to various agencies of governments at federal, state and local government levels.
These taxes, according to them, are slowing down their expansion drive across the country, while also limiting digital inclusion and mobile penetration, as the vicious cycle continues.
Speaking during the presentation of a report on, Tax and Enabling Business Environment in Telecoms sector, at an event in Lagos, operators said the multiplicity of taxes and levies in the industry has a direct negative impact on the affordability of telecommunications services.
They added that the matter may get worse for both operators and consumers, should the planned nine per cent Communications Service Tax (CST) currently undergoing scrutiny at the National Assembly eventually scaled through and become a law.
The operators charged the government to target individuals and businesses that are evading tax, rather than put the tax burden on the telcos alone.
According to them, the balance lies in a landscape where taxes are fair, harmonised, clear, and aligned with the objective of advancing connectivity.
The report noted that the multiplicity of taxes directly impacts the industry’s ability to innovate; improve mobile and data network quality, reduce prices, drive mobile penetration, and deploy infrastructure around the remotest parts of the country. It stressed that it also directly impacts the ability of telecoms operators to support nascent businesses and industries, further stunting economic growth.
“And when the number of taxes imposed continue to rise even further, as with the recent introduction of the Police Trust Fund Levy, Communications Service Tax, these costs are inevitably passed on to you, the consumer,” the report stated.
The report urged canvassed that the Taxes and Levies Act be revisited to keep retail prices optimal and ensure an enabling business environment.
Corroborating the report, the Chairman, Association of Licensed Telecoms Companies of Nigeria (ALTON), Gbenga Adebayo, said the issue of multiple taxes has been a recurrent decimal that needs Executive Order to address the situation.
According to him, the government is in the habit of imposing taxes that have no bearing with telecoms operations such as Parking tax, Effluent Discharge tax, Social Service levy, PAYE tax, Right of Way tax, Sewage tax, Environmental/Ecological tax, Hawking levy, Building Fitness levy, among many others.
Speaking on the implications of taxes on telecommunications, Adebayo said it would stifle economic growth. “Overtaxation has several consequences. Foremost, it necessarily limits Nigeria’s economic growth, because it directly limits telecoms operators’ expansion drive and thwarts sector investment and advancement.
“This then limits digital inclusion and mobile penetration. As some of these taxes are passed on to consumers, the vicious cycle continues, as mobile/data usage falls, the government tax net remains narrow and revenue targets are not met.”
Noting that telecoms need massive infrastructure to connect with individuals and businesses, he said: “Our major challenge stems from the activities of supposed land owners of infrastructure sites, states, and local governments. We have instances where state and local government authorities have physically invaded offices, locked up base stations, and employed other unwholesome tactics to enforce these taxes and levies.”
The report called for an urgent re-evaluation of Nigeria’s fiscal priorities fit for population explosion set to occur over the next two decades.
“The current fiscal landscape reflects an approach that emphasises short term unsustainable gain at the expense of long term sustainable growth. No nation has ever taxed itself into prosperity. Governments do need money. How often, and from whom they take it, are difficult political issues; but we must ask the questions that lead us on a path to envisioning a better Nigeria for us all.
“We must designate telecoms assets as critical national infrastructure, to safeguard the lifeblood of our nation from disruptive actions with rising insecurity and terrorist activity, our intelligence and emergency forces,” the report stated.