When the Nigerian government lapsed into a financial fix, so much so that debt servicing surpassed revenue by N310bn, that was an indication that something had to give. According to the fiscal performance report for the first four months of 2022 released on July 21, the federal government’s total revenue for the period was N1.63trn while debt service gulped N1.94trn. A deficit of N3trn was recorded within the four months, even as N1.94trn was expended on fuel subsidy. It got worse with the Nigerian National Petroleum Company Ltd heaving upon the federation the responsibility of funding petroleum subsidy. In the face of the ensuing cash crunch, it was only a matter of time before an uninventive government looked toward the easy means of sourcing cash, which unfortunately is at the expense of the Nigerian people.
The above contextualizes the report that was rife this week about the federal government declaring that there is “no going back on tariff hike on calls, data.” President Muhammadu Buhari had, in May 2022, approved the collection of 5 percent as excise duty on telephone recharge cards and vouchers, projected to raise at least N150bn. The charge comes as part of new items on the list of goods liable for excise duty on the Finance Act, 2020 in the country. The Act stipulates January 1, 2021, as statutory enactment, however, the excise duty on telecommunication services is yet to be implemented to date.
Speaking through an Assistant Director in the Federal Ministry of Finance, Budget and National Planning, the Minister of Finance, Zainab Ahmed, said, “henceforth, the five percent excise duty will be collected by telecom operators and payment made to the federal government on a monthly basis on or before 21st of every month”. Regrettably, the elbow room for Nigerians to wiggle from this new policy of deprivation and pauperization was blocked by the language of this communication, in that it intends citizens to bear the cost. When the new 5 percent excise duty is added to the extant 7.5 percent value-added tax on telecommunications services jacked up from 5 percent in 2020, Nigerians would be paying 12.5 percent taxation on data and call services. The Association of Licensed Telecom Owners of Nigeria (ALTON) has said, “We will not be able to subsidize the 5 percent excise duty on telecom services. This is as a result of the 39 multiple taxes we are already paying coupled with the epileptic power situation as we spend so much on diesel.” On this basis, the cost of one-minute phone calls will possibly jump from N20 to N40, while data tariffs could also go up to about N2,500 per gigabyte.
Although an indolent government is a culprit here, it is unfair for the telecoms, who are so prosperous that they would rather not publicly declare their profits in the face of losses being suffered by players in other sectors, will seek to push this burden to consumers. There goes another instance of an unfeeling government throwing its people under the bus. We consider it quite embarrassing that the federal cabinet didn’t act in unison on this matter. According to the Minister of Communications and Digital Economy, Isa Pantami, “I was not consulted before the decision on five percent excise duty was reached, and it was unfair to impose such a tax on an industry that was already burdened with other taxes and already contributing about 17 percent to the country’s revenue”.
While we feel for the telecom operators over the multiple taxations they have to deal with, we empathize more with deprived Nigerian masses whose meager income the government is targeting. Naija News is constrained to ask why Buhari and his government are taking the country back to the military epoch where a Minister of Communication reportedly stated, “telephone is not for the poor”? Buhari must be unequivocally told that his government is invoking this statement with its resolve to impose another tax on Nigerians. Unfortunately, while the poor in that military junta could do without the telephone, people can hardly do without GSM and data services in today’s world. These tools are not luxuries but necessities. As it were, more Nigerians now see voice and data calls and virtual meetings as the safest alternatives to travelling on bandit-infested highways and rail lines where lives, limbs, and livelihoods are at great risk. It is preposterous for the government to impose on telecommunications products a levy meant for goods, products, services, or activities such as tobacco, alcohol, narcotics, and gambling – the use and consumption of which the government seeks to discourage. Or should we take it that the Buhari government considers telecom services harmful?
One of the things ailing Nigeria is that those in public offices are so sequestered from the masses that they have no faintest idea of the penury in the land. If they did, Buhari and his people would have known that many Nigerians could not afford recharge vouchers even before the VAT was hiked to 7 percent. With the projected rise in tariff that this excise duty will cause, we shudder at the number of Nigerians who will be shut out of life-changing opportunities because they are not online or lack the means to stay in touch.
Naija News, however, understands the fiscal limitations of government as highlighted in the lead paragraph, solutions to which are in the President and his lieutenants plugging financial leakages and curbing the rampant corruption in the system. Last week, this newspaper bemoaned the misplaced priority of the Buhari government purchasing ten luxury SUVs as gifts to the Niger Republic at a whooping N1.14bn. It’s most disheartening that the controversial excise duty to be squeezed from already hard-pressed Nigerians will likely be squandered in a similar fashion or looted with impunity.
We cannot but agree more with Pantami for faulting the timing and process of imposing the tax on the telecom industry. He was spot on pointing out that “you introduce excise duty to discourage luxury goods like alcohol, but broadband in the telecom sector is a necessity… Part of the responsibility of a responsive government was not to increase the challenges citizens were facing”. Pray, is compassion and milk of kindness no longer an ingrained feature of the female folk? How come Madam Zainab didn’t consider these humane facts raised by Pantami in her bid to implement the 5 percent indirect tax on telecom services? Oh, how Ngozi Okonjo-Iweala is thoroughly missed as Nigeria’s Finance Minister! We recall the palpable anxiety in the polity when Zainab Ahmed announced last November that the federal government was set to remove subsidies on petrol, only for the Senate President, Ahmed Lawan, to say: “I’m happy to inform Nigerians that Mr. President never told anyone that the petroleum subsidy should be removed.”
Minister Zainab Ahmed must be mindful of how Nigerians perceive her and her stewardship in the federal cabinet. That military minister who was widely reported as saying that telephone lines are not meant for poor folks is still being haunted by the same line, despite having repeatedly explained that that controversial comment was taken out of context.