- Say CST Is Anti-people and industry
New bid by the 9th assembly of the Nigerian senate to introduce the 9% Communication Service Tax, after it was stepped down by the 8th assembly has been flayed by the Association of Telecommunications Companies of Nigeria (ATCON) and the Association of Licensed Telecom Operators of Nigeria ( ALTON)
The Red Chamber on Wednesday began the process with the first reading of “A Bill for an Act to provide for Communication Service Tax (CST) as a veritable tool for economic diversification and for related matters.”
The bill is sponsored by Senator Mohammed Ali Ndume (Bornu South).
The Communication Service Tax (CST) rate chargeable will be nine per cent for the use of the communication services.
If passed, the proposed tax will replace the 2.2 per cent increase in Value Added Tax (VAT) being proposed by the Federal Government as announced by Minister of Finance, Mrs. Zainab Ahmed.
The senate is eying over $ 700 million it could earn annually for the federal government if it goes ahead with the planned imposition of the 9 per cent tax on communication services, data and phone usages and other associated services. Telecommunication services was recorded to have earned for the federal government over $7.3 billion revenue in 2017. With 9 per cent on every telecommunication services, the country could earn about $700 million using the 2017 revenue base.
The bid was stepped down during the 8th senate, as a result of the intervention of ATCON NEC to the Senate President on November 8, 2016 whereby it was acknowledged by the distinguished Senators that the growth of ICT is critical to the creation of jobs and reduction in youth unemployment.
ATCON said the senate under the leadership of Senator Bukola Saraki, who presided over the 8th National Assembly, with the Chairman and Vice Chairman of the Senate Committee on Communication, Senator Gilbert Nnaji and Senator Solomon Adeola Olamilekan respectively of that senate government.
tThe leadership of the 9th senate has changed hands and it appears the leadership of Ahmed Lawan was not going to be bound by the agreements reached on the matter under the leadership of senator Bukola Saraki.
ATCON president Olusola Teniola who issued a statement on the new senate plan also noted that at the time the senate gave its word to ATCON that it would suspend the proposed communication tax, the association recommended to government that the tax base of the country should be widened to include more tax payers.
” It was noted that only 13 million out 70 million were contributing to the tax revenue of the federal government and since 2016, Nigeria has under gone a recession and experienced low GDP growth rate coupled with government recurrent expenditure that now exceeds oil revenue.
“Therefore we understand that measures to shore up government income in the way of taxes should be explored. However, government needs to also consider a reduction in the cost of governance that will fit within the new government revenue generated through taxes and oil receipts.
Teniola also argued that it is inconceivable that a CST Bill of 9% that was put aside which is a direct copy of Ghana’s CST is now being pushed through the National Assembly without due consultation with all stakeholders and it is especially targeted at the telecoms and ICT sector.
He argued further that the impact of the adoption of 9% CST bill is that it is a double tax on voice, sms and data service as 5% VAT already applies on these services and it represents an additional burden when applied to a subscriber base of 173million.
“If the passage of this bill goes through it would negatively impact Nigerians and foreigners that use these services and the implementation of this CST bill would take the affordability of data services out of the reach of the citizenry.
ATCON is recommending that government reconsiders the passing of the bill, as it would add to the burden of the already suffering Nigerians. It is deemed as an additional multiple tax, loss of revenue to the industry and can lead to loss of jobs in the sector.
The association reiterates that the burden of shoring up government revenue should be across all segments of society in the way other climes use VAT and not to be targeted to a specific sector.
On his part the Chairman, Association of Licensed Telecom Companies of Nigeria (ALTON), Gbenga Adebayo, had warned that the bill, if passed into law, would lead to an increase in end-user call tariff.
Adebayo said the value of N1000 recharge card would be less than the nine per cent of the tax, adding that the proposed tax will add no value to operators who will become collection agents for the Federal Government.
