The nine per cent tax proposed in the Communications Services Bill by the Federal Government has attracted more ‘nays’ than ‘ayes’ from different quarters. This is expected owing to the fact that if the bill scales through, 145.4 million active telephone line users (as of June 2016) in Nigeria will be adversely affected.
Specifically, the “Communications Service Tax” is proposed to be a nine per cent charge for the use of communication services (Section 4 of the Bill), where communication service refers to voice, SMS, MMS, data, and Pay Per View TV.
It is obvious that the tax will push up the cost of services to consumers and impact negatively on Internet affordability.
The Minister of Communications, Mr. Adebayo Shittu, had, at different forums, laboured to explain to those who cared to listen, that the goal of the proposed CST is to improve revenue generation as stated in Explanatory Memorandum of the Bill.
In fact, the target is put at around N20bn monthly. It is, however, the opinion of many that government should consider other alternatives to raise revenue and, thus, save the already bleeding citizens and the telecom industry from further harm.
On the other hand, the National Assembly could consider the passage of the CST Bill with a much lower tax rate that will enable the government to achieve its fiscal targets without undermining broadband affordability and access, if the tax must be introduced.
Besides the fact that subscribers are going to bear the cost, telecom operators will definitely become more vulnerable, particularly now that Over-The-Top content providers are already pushing telecom operators, revenues downward. This will make an already bad situation worse, ultimately leading to further job losses. The bill, therefore, sort of robs Peter to pay Paul.
Many people have predicted that subscribers would bear the full brunt. True as that sounds, I align with the school of thought that OTT platforms will provide a leeway.
Yes, instead of paying a fixed amount to send a message via the regular service providers – MTN, Glo, Etisalat, Airtel or NTel, smartphone users will cleave more to apps like WhatsApp, WeChat, Viber, Facebook, Twitter, IMO, etc., all of which boasts of large customer bases and offer innovative features like the ability to send pictures and videos seamlessly.
Telcos own the networks, but companies like Google and Facebook can pull surprises on them should they think of yanking off OTT services from their networks. In other words, the nine per cent communications service tax as proposed spells more doom for telecom operators.
Ajay Sunder, Frost and Sullivan, and analysts, agree that the shift is — Finish Reading on the Punch Website
