The Federal Government through the Budget Office of the Federation has revealed that it will begin the implementation of its proposed excise duties on telecommunication services and beverages in 2023.
This is despite backlashes from the Minister of Communications and Digital Economy, Isa Pantami, and the Manufacturers Association of Nigeria. Pantami had during the maiden edition of the Nigerian Telecommunications Indigenous Content Expo organised by the Nigeria Office for Developing the indigenous Telecom Sector, slammed the five per cent tax on telecoms services. He said, “The Ministry of Communications and Digital Economy is not satisfied with any effort to introduce excise duty on telecommunication services.
“Beyond making our position known, we will go behind the scenes and go against any policy that will destroy the digital economy sector. We will go to any extent to legitimately and legally defend its interest.”
The Budget Office of the Federation, which is under the Ministry of Finance, Budget and National Planning, revealed its plan in its ‘2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper,’ which was released on Friday.
According to the ministry, this was in a bid to boost its non-oil revenue streams. The minister further said that it expected excise duty revenue to grow exponentially because of the introduction of telecoms service charge. Discussing the tax which is under the purview of the Nigeria Customs Service, the government said the NCS would introduce frameworks for recovering duties, taxes, and appropriate fees from transactions conducted over electronic networks.
Explaining one of the strategies that would be implemented to improve Customs’ revenue collections over the period 2023-2025, the office said, “Full implementation of excise duty on telecom services, alcoholic, sugar-sweetened beverages, cigarettes and tobacco products. “Therefore, excise revenue is expected to grow exponentially because of the introduction of the telecom service charge and SSBs”
It explained that the law now empowered the FIRS to appoint anyone as its agent to withhold or collect VAT and remit same to the service. Stating the government’s plight, the budget office said, “Revenue generation remains the major fiscal challenge of the Federal Government.
“The systemic resource mobilisation problem has been compounded by recent economic recessions. Recognising that domestic revenue mobilization is important for sustainable development, the Federal Government has instituted the Strategic Revenue Growth Initiatives to improve government revenue and entrench fiscal prudence, with emphasis on achieving value for money.
“These measures include improving the tax administration framework, including tax filing and payment, as well as the introduction of new and/or further increases in existing pro-health taxes like excise on sugar-sweetened beverages, tobacco, and alcohol. Mixed reactions have greeted the implementation of these measures.”
Speaking at a stakeholders’ forum on the implementation of excise duty on telecommunications services in Nigeria, the Minister of Finance Budget and National Planning, Zainab Ahmed, who spoke through Assistant Chief Officer of the Ministry, Mr Frank Oshanipin, said, “The duty rate was not captured in the Act because it is the responsibility of the President to fix rate on excise duties and he has fixed five per cent for telecommunication services which include GSM.
“It is public knowledge that our revenue cannot run our financial obligations, so we are to shift our attention to the non-oil revenue. The responsibility of generating revenue to run the government lies with us all.”
Responding to the new levy, the Chairman, Association of Licensed Telecom Owners of Nigeria, Gbenga Adebayo, had said telecom consumers would bear the burden of this additional five per cent tax, bringing the total tax paid by consumers to 12.5 per cent. A report by The PUNCH had revealed that the Federal Government would generate about N160.46bn from excise duty on telecom services if it is implemented in 2023.
Speaking to our correspondent, the President, National Association of Telecoms Subscribers, Adeolu Ogunbanjo, said, “There is ample time to continue to advocate against it before then. They are set to implement and impoverish more people on their way out. “It is unfortunate that despite the minister’s resentment, they are still going ahead. Why appoint the minister at all. Ministers are to advise the president on matters that are within their purview. They shouldn’t implement it, otherwise, Nigerians will react to this insensitive nature of the government. Let them look to other sectors, why telecoms? We will mobilise Nigerians to go against this.”
MAN had earlier opposed the imposition of taxes on alcoholic and non-alcoholic beverages, saying that it would hurt the industry.