‘Taxes on com­mu­ni­ca­tions ser­vices will deepen poverty’

The Punch - - INDUSTRY - Ife Ogun­fuwa

NIGE­RIA risks deep­en­ing the poverty rate if the pro­posed nine per cent Com­mu­ni­ca­tion Ser­vice Tax is im­ple­mented, the global Sys­tem for Mo­bile Com­mu­ni­ca­tions As­so­ci­a­tion, has warned.

The as­so­ci­a­tion, in a state­ment on Thurs­day, said ex­ten­sive re­search on the im­pact of tax­a­tion on mo­bile com­mu­ni­ca­tion ser­vices in­di­cated that it would pose a se­vere threat to Nige­ria’s fu­ture eco­nomic growth.

GSMA re­called that the In­ter­na­tional Telecom­mu­ni­ca­tions Union stated that a 10 per cent in­crease in mo­bile pen­e­tra­tion in a sam­ple of African coun­tries yields a 2.5 per cent in­crease in GDP per capita.

The 9th Na­tional As­sem­bly in Septem­ber re­vis­ited a Com­mu­ni­ca­tion

Ser­vice Tax Bill that had been shelved two years ago.

The pro­posed bill spon­sored by Se­na­tor Ndume Ali seeks to im­pose and col­lect com­mu­ni­ca­tion ser­vices tax or levy on charges payable by con­sumers of elec­tronic com­mu­ni­ca­tion ser­vices such as voice calls, SMS, data us­age and Pay per View TV sta­tions at the rate of nine per cent.

GSMA, how­ever, said in or­der to sup­port sus­tain­able eco­nomic growth, fis­cal pol­icy in Nige­ria should pro­mote the wider adop­tion of broad­band ser­vices and not ham­per it.

“Such taxes could also end up hav­ing a dis­pro­por­tion­ate im­pact on poorer house­holds,” the as­so­ci­a­tion said.

The head of Sub­sa­ha­ran Africa, GSMA, Ak­in­wale good­luck, said the plans of the gov­ern­ment to deepen broad­band would be af­fected by a new com­mu­ni­ca­tions levy.

“The gov­ern­ment’s longterm dig­i­tal am­bi­tions will be se­verely com­pro­mised if these tax pro­pos­als go ahead,” good­luck added.

“The po­ten­tial of mo­bile broad­band is clear from the rapid de­vel­op­ment of the dig­i­tal econ­omy in Nige­ria. The mo­bile ecosys­tem al­ready con­trib­utes over $21bn to the Nige­rian econ­omy and around 16 per cent of to­tal gov­ern­ment tax rev­enue. The fo­cus should be on boost­ing mo­bile pen­e­tra­tion, and in­vest­ment in net­works to strengthen the econ­omy, rather than un­der­min­ing this through po­ten­tially puni­tive taxes.”

GSMA noted that Nige­ria cur­rently lagged its re­gional peers in mo­bile broad­band adop­tion, say­ing in­creas­ing adop­tion was cru­cial in a coun­try where fixed-line pen­e­tra­tion was at less than one per cent.

The as­so­ci­a­tion said, “Based on GSMA anal­y­sis of the to­tal cost of mo­bile own­er­ship, a 1gb bas­ket in Nige­ria cost around seven per cent of av­er­age in­come in 2018.”

“The af­ford­abil­ity bar­rier is par­tic­u­larly ev­i­dent for lower-in­come cit­i­zens in Nige­ria for whom ac­cess to a 1gb bas­ket would cost around 24 per cent of in­come. The new tax, even if only partly re­flected in prices, will ex­ac­er­bate an al­ready sig­nif­i­cant af­ford­abil­ity bar­rier and ham­per the up­take and us­age of ser­vices, es­pe­cially for lower-in­come cit­i­zens.”

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