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Telecoms firms kick against communication tax

By on June 6, 2016

Telecommunications operators and subscribers in the country have raised objection to the proposed bill for the imposition of a tax on electronic communication services.

The Global System for Mobile Associations, which represents mobile operators worldwide, also joined in the protest.

Their objection was contained in a letter addressed to the ministers of finance and communications, Mrs. Kemi Adeosun and Mr. Adebayo Shittu, respectively.

The letter was signed by the Director, Africa, GSMA, Mortimer Hope; the Chairman, Association of Licensed Telecommunications Operators of Nigeria, Gbenga Adebayo; the President, Association of Telecommunications Companies of Nigeria, Lanre Ajayi; and the President, National Association of Telecommunications Subscribers of Nigeria, Adeolu Ogunbanjo.

“If introduced, such a tax will result in an increase in prices for consumers, have adverse impacts on the adoption of mobile services and industry investment, and be counter-productive to the long-term national digital strategy objectives set by the government of Nigeria,” the letter read in part.

The telecoms operators stated that the communication tax would lead to increased affordability barriers to the uptake of mobile, saying that the socio-economic impact of mobile penetration was now widely recognised.

They supported their argument with a research conducted by the World Bank recently, which stated that 10 per cent increase in mobile penetration in low middle-income countries would lead to 1.38 per cent rise in Gross Domestic Product growth.

According to them, with 83 million people in Nigeria having access to mobile services, and with over half of the population without a mobile connection, “affordability remains a key challenge to connect the unconnected, who are typically lower income population groups.”

The telcos stated in the letter, “Further taxation on electronic communication services will hit lower income consumers the most, who are already struggling due to the adverse economic situation and increased price pressure, and for whom affordable access to Information and Communications Technology is critical to their social and economic inclusion.

“Moreover, this will result in double taxation for consumers who already pay value added taxes on telecommunications services.”

They said that the proposed tax would have adverse effect on the industry’s investment needed to improve and expand mobile connectivity across the country.

The letter added, “Mobile industry investment in Nigeria is already constrained by multiple levels of taxes and fees set by local and regional authorities, in addition to fees to the national telecommunications regulator and high costs of right of ways. In a context of declining average revenue per user, this can make it more difficult for mobile operators to make a business case for investment.

“This proposal would also further increase the administrative cost burden on service providers to comply with numerous and complex tax regulations, already high compared to other countries.”