The implementation of the new 7.5 per cent Value Added Tax (VAT) is taking a toll on the telecoms sector. LUCAS AJANAKU reports that all the stakeholders in the industry are leaking the wounds of the new tax hike.
Mr Ojo is not a flippant caller. He doesn’t make calls for fun neither does he watch videos and engage in other idle pastime online.
A civil servant in Ekiti State and a comedian, he complained about the sudden disappearance of his airtime and depletion of his data.
He said: “I don’t engage in frivolities with my phone. When I buy airtime, I use it strictly for making serious calls but these days, I noticed that the N2,000 airtime that used to last one week finishes within five days.
“Also, my N1,000 data subscription, which I use for a month runs out within two weeks. I took the issue up with my service providers and was told there was no error with my subscription from their end.”
Another subscriber, Gbemisola Kokumo, a nursing student in Lagos, said she subscribes to data connection at N1,000 monthly.
She said over the years, this arrangement had helped her to do check her email, read newspapers and do research online.
According to her, things have since changed as her data subscription and airtime hardly last her for days any longer.
She said: “Each time I make calls, my service provider will send me my account details with VAT. What type of country is this?”
Gbemsiola and Ojo are but few examples of what subscribers are passing through, no thanks to the implementation of the 7.5 per cent VAT in the telecoms sector by the Federal Inland Revenue Service (FIRS).
Expectedly, subscribers have taken their protest to the Minister of Communications and Digital Economy, Dr Isa Pantami.
In a statement, Pantami lamented that his office had been inundated with complaints and enquiries concerning the new VAT deductions on voice calls and text messages, by some Mobile Network Operators (MNOs).
“While we appreciate the support and efforts of well-meaning Nigerians who have sought clarifications in a civil manner, we wish to inform the public that the issues of VAT, do not fall under the Ministry’s purview. The office of the Minister of Communications and Digital Economy is not mandated to handle VAT.
“In the same vein, we also wish to notify the general public that contrary to popular opinion in some quaters, the Minister of Communications and Digital Economy had no prior consultation or awareness about the develpment. All further enquiries and clarifications may henceforth be directed to the FIRS, being the proper institution for tax matters.
“The minister assures all Nigerians that under his leadership, the interest of all Nigerians will be protected.”
Telcos react
The Association of Telecoms Companies of Nigeria (ATCON) said the VAT hike has led to a corresponding increase in the cost subscribers pay.
Its President, Olusola Teniola, said: “The VAT increase to 7.5per cent has led to a corresponding increase to all calls, data services and other telecommunication services that attract VAT charges, including handset/devices. The government needs to balance its annual recurring expenditure versus slowing government revenue, otherwise, the ability of the average Nigerian to afford to make a call or purchase data will decrease inline with any increase in taxes. This will further put pressure on the revenue lines of the players in the industry with a resultant decrease in the Annual Operating Levy (AOL) paid to the Federal Government via the Nigerian Communications Commission (NCC).
“The increase in VAT affects affordability as price increases means those below the poverty line or near the poverty line can no longer afford to make calls or even buy data as before! Any further idea of government imposing a Communication Service Tax (CST) of nine per cent in addition to or in replace of 7.5per cent as suggested by Senator Udume will make matters worst.”
READ Also: 7.5% VAT: Govt not creating extra burden for MSMEs – Osinbajo
The Association of Licensed Telecoms Companies of Nigeria (ALTON) said there had not been end user tariff hike.
Its Chairman, Gbenga Adebayo, said: “There’s no impact on tariffs, there are no increases in cost of calls or date, the industry complied with the directive of VAT increase by collecting on behalf of Government 7.5 per cent as VAT as again the five per cent before the new policy. It doesn’t affect our tariff in whatsoever and howsoever.
“VAT of five per cent has always been deducted from voice and data subscription. But now it’s 7.5per cent as required by the new law.”
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