As Angry Nigerians Attack DG Budget Office, Ben Akabueze, over Insistence on Five Percent Telecom Tax

It all started like a joke on June 29, 2022 when the Federal Government announced that telecommunications subscribers would pay extra five percent tax on calls, SMS, and data services as a way to generate more revenues that will change Nigeria’s economic situation. Majority of Nigerians were however taken aback by what many saw as a cruel joke meant to further impoverish a poverty-stricken populace.

It is said that it is difficult if not impossible to find God-fearing men in government in this part of the world. But one man continues to stand out as a true man of God who doesn’t believe that people need to be taxed to death before government can generate enough to run the affairs of the state. The Minister of Communications and Digital Economy, Professor Isa Ali Pantami, has from day one maintained a massive opposition to the new tax with the argument that the telecom sector has been taxed enough and it is already contributing a huge chunk of the country’s non-oil revenue. Aside that, Pantami believes the economy is not bright at this time for the masses to be burdened with a new tax regime.

While the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed, argued that the new measure was not meant to punish Nigerians but a revenue generation emergency, Pantami consistently spoke against it and worked behind the scene to get the President to suspend it.

Earlier in the month, Pantami came up with the cheering news that President Muhammadu Buhari had approved the suspension of the proposed excise duty on telecommunications indefinitely and constituted a committee to look into the matter. But some other government officials didn’t even allow Nigerians to finish celebrating before they threw spanner in the works.

In a move that has been described as sadistic, the Director-General of the Budget Office, Ben Akabueze, insisted, days later, that the proposed tax remains in effect and would be implemented soon.

“There are extensive studies on this subject about the taxation of telecommunication companies in Africa and other developing countries, and I assure you that the average effective tax rate, which is called the AETR on telecommunications, in Nigeria is below the African average.

“There are several countries in Africa where the AETR on telecommunications is over 90 per cent which is giving rise to the concerns that in some places they may currently be overtaxed, but certainly not in Nigeria.

“Again, on this continent, as of today, we have the lowest tax to GDP ratio. And so, at a time when we face existential revenue challenges, I think that we all need to be really circumspect about what views we take on this matter.”

But Akabueze has been arguing in isolation and has refused to take other variables into consideration.

One of that is the fact that Nigeria’s Mobile Network Operators (MNOs) currently pay more than 40 distinct taxes and levies for providing telecom services which no one can explain why it has be so. We are not sure if there is no plan to kill the MNOs or to discourage more investors from coming into the country.

Going into the macroeconomic variables which Akabueze chose to ignore because doing that favours his narrow argument, core inflation, headline inflation and food inflation are all in excess of 20 percent, unemployment is over 33 percent, underemployment is extremely high, the naira has been on a free fall, cost of goods and services are skyrocketing, purchasing power is at an all-time low in the face of mass excruciating poverty, and yet someone in government wants to squeeze poor Nigerians to death with more taxes!

There is no way the tax can be implemented without directly affecting Nigerian youths who rely on airtime and data to study and conduct businesses

Professor Pantami in his book “Datafication of Society to Foster an Internet Economy” states that “data is the new oil.”

He argues further that: “This has become a new identity for a nation that has depended on oil. Telecom airtime and data is now classified alongside food and shelter as physiological needs. Thus, anything that will jeopardise the increase of Nigeria in the global ecosystem should be rightly suspended.”

It is quite surprising that the same Federal Government that is advocating for a robust digital economy by 2050 and inclusion of all citizens is the same struggling to burden its populace with new telecom taxes. This is because if the 5% telecom tax is imposed, the excise duty which is a production tax will finally get transferred to consumers. The new levy would essentially raise the consumption tax on telecommunications services, such as phone calls and internet data, to 12.5% from the current 7.5% VAT rate.

“Excise duty is introduced to discourage the consumption of certain commodities like alcohol and tobacco. But today, without broadband penetration, how can you perform financial transactions, how can you deliver lectures without that, how can you work in a hospital, these services are a necessity.

”According to the Nigerian Communications Commission (NCC), the sector contributed N3.25 trillion in income in 2021, and based on the sector’s growth rate so far in 2022, the new tax is expected to collect N200 billion over the course of the following year.

“This is to note that telecom companies contribute 2 per cent excise duty to the NCC already and telecom consumers also pay 7.5 per cent for consuming telecom services,” Pantami argued.

To buttress Pantami’s argument that the telecom sector is already being overtaxed, the National Bureau of Statistics (NBS) report stated that the Federal Government made N127.03bn from Value Added Tax on calls, SMS, data, and other information and communication services in the first six months of the year of 2022. This is 10.69 per cent of the total N1.19tn that was collected as VAT within the period under review.

The Voice of the People

Pantami is obviously not alone in the protest against this cruel tax regime. The Stakeholders Consultative Forum on Implementation of Excise Duty have kicked against it. The Executive Secretary, Association of Telecommunications Companies of Nigeria (ATCON), Ajibola Olude, has also suggested that taking cognizance of the hardship in Nigeria at a time like this, the government should rescind its decision to implement the five per cent excise duty on telecommunications operators.

In the same vein, the Chairman of the Association of Licensed Telecoms Operators of Nigeria (ALTON), Gbenga Adebayo, insisted that the new tax burden would be passed to subscribers.

In the midst of the back and forth surrounding the implementation of the telecom tax, a cross section of students currently on protracted holiday due to the strike by the Academic Staff Union of Universities (ASUU) told Economic Confidential that the proponents of the new tax regime are enemies of the country who are looking for ways to drive the youths crazy.

According to the students, after the government conspired with ASUU to keep them away from their studies for so long, Akabueze and co are now looking for more ways to frustrate them and push them to the wall.

Oreoluwa Adedoyi, a 300 level student of Chemical Engineering at the University of Lagos, stated that “since the strike started, I had to enroll in some online courses to keep up with my studies. All my classes are virtual and I load up to 20GB MTN special data plan which lasts for a week . At a time, that was too expensive for me to afford but I had to keep on doing it to sustain my learning but when I learnt of the proposed increase I was so discouraged that I felt bullied by this Mr Akabueze. Being offline can be quite draining, especially for students like me. I hope the Federal Government will reconsider this.”

Alimodu Mustapha, a cobbler studying at Bayero University, Kano, explained that, “as a result of the unending strike, I started trading online not too long ago. This increased my sales and capital a little due to having to deliver to more clients.”

“Despite the fact that I get little profit from being online, I realise that spending so much money to stay online drains me, but what can I do? I have to purchase data to sustain my business, but when I learned about the tax increase and how it will affect small businesses like mine, I felt disappointed with the government especially the insensitive Mr Akabueze. Whether they increase the tax or not, the Minister of Finance predicted that Federal Government is expected to borrow N11tr by 2023, so why still frustrate us? I wonder how they expect us to cope with the new policy since they are advocating for digital inclusion.

Also, Ifeoma Ugwu, a university graduate said, “when I heard of the increase in telecom tax, I knew the citizens will be most affected as they will bear the brunt of what the telecom providers will push down their throats as a result of any new government policy. We trade mostly on phone and receive classes online as well. So government has no choice but to reconsider this anti-people policy and put the Akabuezes to shame.

Taking a different dimension, a top member of the All Progressives Congress (APC) who wished to remain anonymous came down hard on Akabueze and his accomplices who he accused of trying to sabotage the administration of President Buhari.

According to him, the President is making remarkable progress in infrastructure, security and power and he is trying to leave a very good legacy despite the challenges but some people he called internal saboteurs are trying to get Nigerians angry with the administration and the ruling party.

“Nigerians are already very angry with us in the ruling party over the state of the economy. But as we are trying to placate them and urge them to keep faith with the APC ahead of the elections, some internal saboteurs are working hard to make sure APC loses election in February. If not, why a new tax regime now? Why now?

What is more baffling is that the President has received our advice and suspended the new tax but one Akabueze is saying no, it must go on. See, we need to start investigating some people in this government. Governor Wike has said some hawks in the Villa are working for Atiku. Now I have reasons to believe we have enemies within us. Enemies who want to make sure Asiwaju Bola Ahmed Tinubu and other APC candidates lose elections in February. If not, how can a mere DG of Budget Office be defying both a Minister (Pantami) and the President? Who is he working for?

“Let me urge Professor Pantami to keep drumming it in the ear of the President that this lousy tax regime must not see the light of day. Our people are suffering and angry. What they need is support, not wicked taxation,” the angry politician said.

As it is said in Latin, vox populi, vox dei. The voice of the people is the voice of God. It will be in the overall interest of the government and the people of Nigeria for the former to suspend this obnoxious tax and let my people breathe.

Related