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Nigerians, particularly the country’s 160 million mobile phone users, could face higher costs for calls and data services in 2023 due to a new 5% excise duty on telecom services. The government had considered imposing this tax earlier but suspended it after public outcry. Now, it has been included again in the 2022 Finance Bill, which is currently under review by the National Assembly.
The new tax is part of the government’s strategy to generate more revenue to fund the national budget for 2023. However, telecom operators have warned that this tax will lead to increased costs for consumers. As a result, the National Association of Telecoms Subscribers (NATCOMS) has threatened to take legal action against the government if the tax is not removed from the bill.
A document from the House of Representatives Committee on Finance outlines the excise duty on telecom services, but it did not specify the exact rate. However, it has been confirmed that the rate is 5%. According to the Association of Licensed Telecoms Operators of Nigeria (ALTON), the new duty will force operators to pass on the additional costs to customers.
Gbolahan Awonuga, head of operations at ALTON, expressed disappointment that the government is pushing ahead with the tax despite strong opposition from industry stakeholders. He explained that telecom operators, who have not increased tariffs since 2003, will be forced to raise prices to cover the cost of the new excise duty, as well as other rising expenses, such as the cost of diesel to power telecom towers, which has more than tripled in 2022.
Awonuga further stated that telecom companies are already burdened by multiple taxes and obligations. He warned that if the excise duty is passed, the telecom industry will have no choice but to increase prices for calls and data services, putting additional financial pressure on Nigerians.
Chief Adeolu Ogunbanjo, president of NATCOMS, also condemned the excise duty, calling it unfair to both consumers and telecom providers. Ogunbanjo noted that the telecom sector already pays 39 different taxes, many of which go to the federal government. He criticized the government for adding another tax, which he described as an unnecessary burden on the industry.
Despite opposition from the Minister of Communications, Prof. Isa Ali Pantami, and other telecom organizations, the Ministry of Finance has not withdrawn the tax. As a result, NATCOMS has announced plans to take legal action in early January 2023 if the excise duty remains in the Finance Bill.
Ogunbanjo has called on President Muhammadu Buhari and the Minister of Finance, Mrs. Zainab Ahmed, to reconsider the decision and remove the 5% excise duty from the bill, arguing that it will harm both telecom consumers and the broader economy.
