LIVE UPDATES
Following the reintroduction of the Federal Government's five per cent excise duty on telecommunications, telecom expert has warned that subscribers will bear the bulk of the burden.
The Director of a telecommunications firm, Adaba Consult, Ejike Onyeaso, said the implications of the tax would significantly affect consumers, who were already grappling with economic hardships.
He said, “The various communication companies are going to pass the cost to subscribers, further worsening the current economic situation we have."
The five per cent excise duty was introduced in 2022, but due to stakeholders and customers criticisms amid the economic hardship, the current administration led by President Bola Tinubu suspended its implementation in July 2023.
At the time, the President ordered the suspension of not only the telecom excise duty but also the import tax adjustment levy on certain vehicles, citing concerns over their impact on consumers and the economy.
The telecom consultant noted that the excise duty was previously removed primarily to alleviate the financial strain on subscribers, making its reintroduction a matter that needs serious reconsideration.
“The government needs to revisit this decision because, in the end, subscribers will be worst off," he said.
He understood the need for public awareness and the impact of tax increment, saying, "There is a need for better communication between the government and telecom companies to help consumers understand why telecom service costs might rise.
“The right thing to do is create awareness so that subscribers understand the implications of this excise duty.”
The excise duty is part of a broader tax reform bill currently under review by the National Assembly.
Onyeaso noted that it was essential for the government and telecom operators to engage in dialogue that highlights the negative consequences of the tax on subscribers.
“Consumers deserve to know that any increase in telecommunications operations’ costs may not just be a decision made by mobile network operators but a direct result of government-imposed taxes,” he said.
Earlier, the President of the Association of Telecommunications Companies of Nigeria, Tony Emoekpere, expressed concern that the excise duty would have a negative impact on the telecom sector.
He stated, “We are here to see how this excise duty will affect the industry, but it seems clear that it will hurt both telecom companies and consumers.
“The implementation of an excise duty is challenging because it is typically a fixed fee, unlike VAT, which is a percentage-based tax. This will be difficult to manage.”
