If there’s one thing the Buhari government knows how to do, it’s to keep taking without giving enough back. That’s exactly how he’s driven Nigeria’s debt profile from ₦12.1 trillion in 2015 to ₦41.6 trillion in 2022.
For his next trick, he’s raising taxes on the telecommunications industry that’s going to make life a bit harder for everyone.
How’s he gonna do it?
The Minister of Finance Budget and National Planning, Zainab Ahmed, announced on August 4th 2022 that a 5% inclusive excise duty is about to fall on telecom services in Nigeria.
This tax didn’t just come out of nowhere. In fact, it’s in the Finance Act of 2020 but remained dormant like a tumour just cooking to fuck up your life when you least expect it.
Ultimately, the decision to fix the rate on excise duties was on President Always Take, and he’d been taking his time to do that, until now.
Why’s Buhari doing this?
The truth is Nigeria is broke. The country’s income isn’t even enough to take care of settling its debt, not to talk of other things you need money to run.
And since Nigeria’s oil revenue isn’t vomiting nearly enough money, the government is looking into non-oil sectors to pull their weight. That’s why the president is turning to the telecom sector to squeeze some more revenue out of it for the government to spend.
But how does this affect your pocket?
When the government announced the imminent implementation of the additional 5% tax, operators didn’t waste any time in passing it on to their customers. The Chairman of the Association of Licensed Telecom Owners of Nigeria (ALTON), Gbenga Adebayo, said operators already pay too many taxes to the government and can’t shoulder another one. And what’s even crazier is that this tax is rare in a sector like telecom.
Excise duties are indirect taxes placed on the manufacture of non-essential, potentially harmful products like alcohol and tobacco. You can call it a “sin tax” in the sense that it exists to discourage the consumption of such products.
But in this case, Buhari has extended the sin tax to something as essential as talking to your family and friends as this will affect the prices of things like recharge cards and vouchers. Why would he do this? Maybe because he hates your enjoyment. Or he needs all the revenue he can get to send more exotic cars across the border to his first cousins in Niger Republic.
Is anyone fighting this?
Telecom operators aren’t happy about the excise duty, but they’re passing the burden of it to their customers like it’s an STD, so it may be naive to expect them to put up a spirited fight. But someone else has offered to do that.
Resident terrorist sympathiser who’s also the Minister of Communications and Digital Economy, Isa Pantami, is a surprise objector to the tax.
The minister said more taxes on the telecom sector makes no sense as it’s already one of the government’s hottest honeypots.
Pantami feels so strongly about the tax that he’s vowed to fight it by any means necessary so it doesn’t destroy the digital economy sector.
What’s the damage here?
Only a handful of countries place excise duty on telecom services. And the danger is that consumption levels may drop because Nigerians are already seeing shege with the state of the economy. If demand drops, the revenue generated from the telecom sector may start to shrink and ultimately worsen Nigeria’s revenue headache.
Right now, it’s still unclear when full implementation of the excise tax will commence, but if it does, communication is about to get more expensive for you.