The contentious 5% excise tax on communications services that was recently announced by the Ministry of Finance was suspended by the Federal Government yesterday.
At the first meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector in Abuja, Isa Pantami, minister of communications and digital economy, announced the suspension and claimed the industry was already overtaxed and didn’t require more.
Pantami said he petitioned President Muhammadu Buhari over the long term effect of the tax if allowed to stay and got his approval to suspend the tax.
He was also allowed to constitute a committee which will look at the tax critically and advise the president appropriately.
The committee include: Pantami Chairman, while the Minister of Finance and National Planning, Chairman Federal Inland Revenue Services (FIRS), Executive Vice Chairman (EVC) of the Nigerian Communications Commission (NCC) and Representatives of all the telecom companies in Nigeria are members.
The ministry of Finance and the Nigerian Customs Service had recently announced plans to start implementation of proposed five percent exercise duties on telecommunication services and beverages in 2023.
But in a swift reaction, Pantami kicked against the move, saying it will increase the cost of telecommunication services, impoverish Nigerians the more and widen the gap in telecom access in the country.
Telecom operators under the aegis of Association of Licensed Telecom Operators in Nigeria, ALTON also kicked at the proposed tax, lamenting that it will whittle the growth of telecom penetration and put unnecessary pressure on subscribers ability to use telecom services.
Announcing the suspension of the tax yesterday, Pantami said: “It is because of my intervention that the President granted my prayers. He not only granted immediate suspension of the excise duty in the digital economy sector, but also approved that a committee be constituted to look into the matter carefully and advise accordingly.
“The president has appointed me to be his eyes and ears in the sector and it is my responsibility to ensure we are just and fair to the operators, government and most importantly our people that are the consumers,” the minister added.
Explaining how he got the ears of the president to suspend the tax, Pantami said he petitioned the President and reminded him that excise duty is usually fixed on luxury products.
He also revealed that he reminded the President that currently, the ICT sector is over burdened by so many categories of taxes numbering up to 41. Some of these taxes, according to him, are duplicated and collected by the federal, state and local governments.
For him, the current economic situation doesn’t allow for continued burden on the poor citizens.
Receiving the news of the suspension, Chairman ALTON, Engr Gbenga Adebayo said it was a victory for the subscribers who would have borne the brunt of the tax. He said: “The news of the suspension is well received. It shows that the government is listening to the complaints of the people and is always ready to do everything to increase penetration.
If the tax remained, the burden will be passed on to the subscribers and that would have put untold hardship on them. It is actually a victory for them. I want the government to listen more and take decisions that will improve our quest to be a digital economy. More of these types of decisions will show Nigeria is ready to use ICT to build the economy” he added.