Business leaders kick against proposed communication service tax
Posted by News Express | 18 August 2016 | 2,154 times
Business leaders, notably the Lagos Chamber of Commerce and Industry (LCCI), say the Federal Government needs to balance its drive for taxation and the demand of the private sector to have a convivial doing business environment.
This is coming on the heels of the Communication Service Tax Bill currently in the Senate, which proposes a charge of 9 percent for the use of communication services such as voice calls, SMS, MMS, data from telecoms providers and pay stations, among others.
“We know that the government is seeking to diversify its revenue base. But it is also true that the private sector players would like to see an investment-friendly environment, especially in the light of the prevailing high cost of doing business in the country,” Nike Akande, president, LCCI, said, at the private sector dialogue on the proposed tax in Lagos on Wednesday.
The chamber believes that it is in the best interest of Nigerians to have a virile, robust and growing economy, Akande said, adding that creation of a good business environment is imperative to making this proposal happen.
Taiwo Oyedele, partner at PricewaterhouseCoopers, said the calculated estimate for the proposed Communication Tax would be over N20 million per month.
“But then they have constructed the bill on wrong assumptions and have overestimated, because if the tax on communication and internet services will be increased, then definitely the users of these services will drastically decrease, resulting in them making way less than they anticipated and estimated,” Oyedele said.
He said research had proven that Nigeria was one of the lowest tax compliance countries, despite having a population of about 180 million people.
“There are only 10 million tax payers from the 36 states. Therefore, we expect that policies made should leverage the telecommunication sector to help expand tax rate, not imposing tax on telecommunication services, thereby discouraging the sector instead of encouraging it,” he advised, stressing that government should focus more attention on tax evaders and increase the number of tax payers rather than on impose taxes on telecommunications, which might end up retarding the wheel of progress in the economy and country as a whole.
Gbenga Adebayo, president, Association of Licensed Telecoms Operators of Nigeria (ALTON), said the proposed bill would lead to decrease in the flow of revenue, as investors would take their investments to other countries with lower tax rates.
“Nigeria needs investment so as to provide employment especially to our growing youth. Owing to that increase in call rate, there will be drastic reduction in the composition of data usage, as well as voice call, SMS, MMS, pay tax and the like, which will reduce usage and the country’s GDP,” Adebayo said.
“ALTON position in respect to the nine percent tax is that when the legislature is drafting out policies, the policies should be investment friendly, which will in turn will be beneficial to the whole country and economy at large,” he added.
Speaking during the interactive session, Abdul-Raheem Adebayo Shittu, Minister of Communications, said there are many areas in Nigeria where there are no access to internet to telephone and the like
“By 2018, we hope to have accomplished 30 percent of widespread use of telecommunication in all the areas of Nigeria, but presently we have accomplished only 10 percent. But then there is a probability that with the nine tax rate charge, accomplishing this will be almost impossible,” Shittu said.(BusinessDay Nigeria)