While Nigerians are still adjusting to telecoms operators’ planned 40% hike in tariffs, it appears that more pain is on the way in the coming days, as the Federal Government has approved the collection of a 5% excise duty on telephone recharge cards and vouchers, according to the report.
The directive was reportedly given by President Muhammadu Buhari.
In a letter to the Nigerian Communications Commission (NCC), the Association of Licensed Telecoms Operators of Nigeria (ALTON) claimed that economic challenges, rising energy costs, and the Russia/Ukraine war, among other things, forced them to raise call, SMS, and data rates.
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The price floor for calls will rise from N6.4 to N8.95 under ALTON’s proposal, while the price cap for SMS will rise from N4 to N5.61.
According to TheCable, the 5% charge is part of a new list of goods subject to excise duty included in the country’s Finance Act.
Excise duty is a tax levied at the point of production. It’s also a type of indirect tax imposed on the sale or consumption of certain goods, products, services, or activities, such as tobacco, alcohol, narcotics, gambling, and so on, with the goal of discouraging their use and consumption. The list has been expanded by Nigeria’s Finance Act to include beverages and non-alcoholic beverages, among other things.
According to the report, the Minister of Finance, Budget, and National Planning, Zainab Ahmed, issued a circular instructing Nigerian Customs to create a tariff line for the collection of excise on mobile phones, electricity metres (components), and set-up boxes at 5%.
The duty is expected to generate at least N150 billion for the federal government, with customs pocketing around N10 billion as a 7% collection fee.
The circular is in line with customs’ other list of excisable items, which includes 5% excisable telephone recharge cards and vouchers.
The collection was also said to be one of the new items included in President Buhari’s 2020 Finance Act. Despite the absence of a rate, it is clear that the President may have approved the collection of the duty at 5%, as the Act allows.
According to Kehinde Aluko, a telecoms expert, determining telecoms tariffs is not something that can be done on the spur of the moment; it requires procedures. “Consultants will be contacted, and the process could take a year to complete.” That rigour was applied to the tariff they are currently using. So, even if their request is granted, it will be subjected to a lengthy process that will not allow for immediate implementation.”
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“As difficult as the country’s challenges are, I believe telcos will be able to cope. They continue to report massive profits. Instead of raising tariffs, I believe they should investigate other avenues for generating additional revenue.”
When contacted by NCC for confirmation, a senior official who requested anonymity said the commission could not confirm it, “but it is possible that such is in the pipeline.”
“But I don’t know how far they’ve gone,” a senior ALTON official said. I’ll double-check everything and get back to you.”
