New Telegraph

December 10, 2023

LCCI to FG: Be accountable on proposed annual N90bn telecoms tax

With one kobo per second, an equivalent of nine per cent new tax placed on phone calls, the Federal Government will generate not less than N90 billion yearly. The fund, according to government, will be used to finance free healthcare for the vulnerable people in the country. Since the announcement of the new tax, telecommunications subscribers have continued to tackle government, warning it to reverse the decision. In support of the subscribers, the Lagos Chamber of Commerce and Industry (LCCI) has also frowned at the policy.

In a statement by its Director- General, Dr. Chinyere Almona, the Chamber noted that the new tax regime would put additional cost burden on the companies that depend heavily on the telecommunication infrastructure to deliver their services, while subscribers would be forced to spend more amidst economic hardship.

The Federal Government had announced to place a new tax of one kobo per second, equivalent to nine per cent on phone calls. Government claimed that it had to introduce the tax to generate fund to finance its proposed free healthcare for the vulnerable groups – children under five, pregnant women, the aged, physically and mentally challenged Nigerians. Almona said: “The Lagos Chamber recognises government’s struggle with providing healthcare services in the face of the economic realities we face as a nation today.

The private sector has always shown its commitment to supporting the government’s efforts in providing some public infrastructure for the common good of all or mainly for the underprivileged. “Since the liberalisation of the telecoms sector in 1999, licensed GSM operators have invested heavily in infrastructure to guarantee quality service to telecom subscribers. 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.

“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.” Meanwhile, the Chamber urged the Federal Government to use the fund for the purpose it is generated and be accountable. It stated: “Beyond the cost of taxation on telecoms operators, we wish to call the government’s attention to creating a regulatory environment that promotes enterprise— investing more in telecoms infrastructure for a thriving digi-tal economy and minimising the disruptions to telecoms companies’ operations while enforcing tax compliance.

“The realised funds 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 N876Bilion allocation to health in the 2022 Federal Budget is 5.1 percent of the total budget and lower than the 15 percent 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

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