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Tag: taxes

  • Fed Govt, Ondo fight over control of taxes

    There is a cold war between the Ministry of Mines and Steel and the Ondo State government over multiple taxations levied on members of the Quarry Owners Association (QOA).

    The ministry is against the N3, 000 charge levied on the quarry owners by the state government.

    There was a verbal confrontation between leadership of the quarry union and officials the state government for allegedly preventing trucks from moving out of the quarry depot on Akure-Owo Expressway.

    Speaking with reporters, the association’s Vice-Chairman, Jimoh Ojo, said the union would never comply with the state government’s directive.

    Ojo said their businesses had been affected by multiple taxes levied on them by the state government, adding that the matter is before the court.

    The  Director, Ministry of Mines and Steel, Opeyemi Fadare, said only the Federal Government has the right to collect tax on the minerals.

    He cautioned state officials to stop harassing members of the union, saying the step taken by the government was an act of exploitation and a way of increasing cost of building.

    The leader of the consultancy team representing the state government on the issue, Mr. Akinfaderin Oye, said the government has the constitutional right to collect tax from the union.

    He noted that they were hired by the Ministry of Environment to collect the levies from the buyers of the mineral.

    Oye confirmed that he was aware that the matter is before a high court.

  • Educationists decry multiple taxes in Lagos schools

    The Principal, Unique Children Schools, Lagos, Mrs. Olufunmilayo Olatubode, has described the imposition of multiple taxes by the government on private schools as killing.

    She made the observation at the school’s graduation ceremony in honour of the final year students of both the primary and secondary arms of the school.

    According to her, it is very important that various state governments make issues, such as annual taxes, dues and levies imposing on private schools with their payment compulsory as friendly as possible.

    “All these levies are seriously affecting our operations. School establishment is known around the world to be a social service and they should therefore be treated as such,” she stressed.

    Also decrying the proliferation of private schools, the principal called on the government to impose stricter measures to curtail the trend so as to guarantee standards in the sector.

    On graduating students, Olatubode advised them to be committed to their studies, adding that there is no excuse for failure.

    Proprietor/Chief Executive of the school, Mrs. Esther Ayere-Alatise, assured the parents and guardians that the school would continue to produce children who are sound and can compete with their colleagues in any part of the globe1.

  • Women protest imposition of taxes

    More than 100 women from various markets in Aba, the commercial haven of Abia State, have protested what they called the imposition of taxes on them.

    The women complained that the state government revenue contractors and agents in different markets were exacting unfair taxes from them, a development they said was not in the interest of the traders.

    The women, who marched through the major streets in the commercial hub of the state, were chanting anti-taxation songs bearing placards with different inscriptions expressing their dissatisfaction over the alleged taxes.

    The protesting women on their way to Ogbor Hill premises of the Nigerian Television Authority, Channel 6, Aba, were, however, restrained by a combined team of regular and mobile policemen who dispersed them and prevented them from continuing with the protest.

    Sources said that the women after being dispersed by the police later converged around Aba South Local Government headquarters, where they were later said to have been addressed by a man identified as Mr. Nwagbara, said to be working under Aba South Council revenue unit.

    Nwagbara, The Nation learnt, promised to channel their grievances to the appropriate quarters for consideration.

    Some of the women who spoke to our reporter before they were dispersed, said they were paying all manner of taxes and levies in the market that cannot be justified by the contractors, market authorities or the government.

    “As we speak to you, there are several taxes and levies in the market which traders have been subjected to pay. From where do we get the money to pay when roads are bad and business dropped so low because our customers no longer come to buy from us? Some of them are now going to Onitsha to buy what they were supposed to come to buy from us in Aba as a result of our deplorable roads. All we want from government is to help us fix our roads before asking us to pay taxes. And that is why women in the city have come out to say that enough should be enough”, they stated.

    When contacted, the Police Public Relations Officer, Geoffrey Ogbonna said he was yet to be informed about the protest, but stated that police could not have allowed the protest to be hijacked by touts.

    Ogbonna blamed the women for not obtaining police permit before embarking on such protest, stressing that the police would have given them security to ensure that hoodlums did not cease the opportunity to cause mayhem.

  • Addressing tax evasion and compliance

    Addressing tax evasion and compliance

    Taxes are the enforced proportional contributions from persons and property, levied by the state by virtue of its sovereignty for the support of government and for all public needs. From the above definition it is seen that taxes are contributions to a common pool by the people for the use of the people. Governments all over the world need taxes in order to sustain their relevance and to provide for the needs of its citizenry.

    Features of a good tax system

    A tax system is expected to be fair and non-discriminatory. For a tax system to meet these requirements, it must have the following attributes.

    1. Neutral – A neutral tax must be unbiased across economic activities, and not overly penalise work in favour of leisure, nor tax income used for saving and investment more heavily than income used for consumption.

    2. Visibility – A very large segment of the population must be keenly awarethat government costs money, government spending should be held at levels at which its benefits match its costs. This is a critical factor in most developing countries, including Nigeria) where the citizenry believe that tax revenues are not beingexpeditiously administered.

    3. Fairness – This is often stated as making the rich pay higher share of their income in taxes than the poor. There should be some amount of income exempt from tax to shelter the poorest citizens.

    4. Simplicity–A tax system should be easy for the government to administer and enforce, and be easy and inexpensive for taxpayers to comply with. The elimination of multiple layers of tax would also create a system that is much simpler and easier to administer, enforce and comply with. These are critical issues in Nigeria tax systems that require urgent attention. Our tax laws are old and complex, given room for varied interpretations and applications.

    5. Convenience: A good tax system should be convenient in terms for time and mode of payment to the taxpayer.

    6. Administrative efficiency: The process of levying and collecting taxes must be administratively efficient, transparent and economical without any distortion.

    7. Productive: A tax system should be such that brings in sufficient revenue to the Government. Since tax payment involves the outflow of money from taxpayers, some Taxpayers have adopted many strategies to evade tax. Tax evasion is defined as “the wilful attempt to defeat or circumvent the tax law in order to legally reduce one’s tax liability”. Tax evasion is punishable by both civil and criminal penalties.

    Tax avoidance on the order hand, is defined as “the act of taking advantage of legally available tax planning opportunities in order to minimise one’s tax liability.While tax evasion is criminal tax avoidance is legal. This was aptly supported by the celebrated case of Ayrshir Pullman Motor Services & D.U. Ritche V.CIR (1929). The fact of the case and the judgment is as follows:

    The taxpayer changed the structure of its business from sole proprietorship to partnership with five of his children to minimise tax. He appealed to the Court of Session against an assessment which failed to recognise the change. Allowing the appeal, Lord Clyde held:

    No man in this country is under the smallest obligation, moral or other, to so arrange his legal relations to his business or property as to enable Revenue to put the largest possible shovel into his stores. TheInland Revenue is not slow… and quite rightly to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer in like manner is entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Revenue.

     

    Tax compliance tools

    In order to encourage taxpayers to continue to comply, and bring non-compliant taxpayers into the tax net, to increase the tax base and revenue, governments all over the world have put in place some compliance strategies backed by appropriate legislations.

    Section 26(1) of the Federal Inland Revenue Service Establishment Act (FIRSEA) 26(1) gives the Service to call for returns, books, documents and information.

    FIRSEA 27: Gives additional power to the Service to call for further returns and payment of tax due.

    FIRSEA 28: Requires every bank upon demand by the Service to provide quarterly returns specifying:

    (a) In the cases of an individual, all transactions involving N5 million and above

    (b) In the case of a body corporate, all transactions involving N10million and above, the names and address of all customers of the bank connected with the transactions and deliver the returns to the Service.

    (c) Section 28 (3): Provides sanction to any bank that contravenes above provisions.

    FIRSEA 29: Gives power to access lands, buildings, books and documents.

    FIRSEA 32: Gives power of addition for non-payment of tax and enforcement of payment.

    FIRSEA 33: Tax Investigation; this section empowers the Service to employ special purpose Tax officers to assist any relevant law enforcement agency in the investigation of any offence under this Act.

    FIRSEA 47: Gives the Service powers to prosecute any of the offences under this Act subject to the powers of the Attorney–General of the Federation.

     

    The role of tax audit

    In addition to all the tax provisions mentioned above, FIRSEA S:26(4) and S.60(4) CITA went further to state:

    •Nothing in any other provision of this Act shall be constructed as precluding the Service from verifying by tax audit or investigation into any matter relating to any return or entry in any book, document, accounts including those stored, on a computer, in digital, magnetic, optical or electronic media as may, from time to time, be specified in any guideline by the Service.”

    All the above provisions, among others, are compliance tools meant to ensure that a taxpayer does not pay less or more than what he is required to pay by law. This objective is achieved through tax audit.

    The purposes of tax audit are to:

    •To educate taxpayers

    •Maintain self assessment system

    •Collect taxes as imposed by the laws through the encouragement of voluntary compliance

    •Maintain public confidence in the integrity of tax system.

    •Provide deterrent effects on other taxpayers not yet audited, as they may quickly file their returns to avoid sanctions.

    Most taxpayers will be willing to pay their taxes as and when due, if government is transparent and accountable. It is the common experience in the developing countries that governments have not demonstrated enough commitment towards providing the citizenry with required facilities and infrastructure that would encourage an average taxpayer to be voluntarily compliant. Roads, electricity, education and health facilities are in short supply, facilities that are already in place are not properly maintained. There is growing apathy among the taxpayers about the commitment of government to use the taxes paid to provide for their needs. These are the issues that need to be addressed in order to improve the level of compliance. Both the government and the taxpayers must resolve to work in collaboration and meet mid-way for the society to develop and enjoy peace and security.

    A government must have the trust of its citizens.

    The government that cannot be trusted may not have moral the courage and determination to maximise its tax potential. Total tax revenue, which is the tax rate multiplied by the tax base, can be increased when government is physically present in every nook and cranny of the country by means of provision of social amenities.

    The citizenry is getting impatient and agitated. The time for the government to do the right thing is now. Tomorrow may be too late.

  • ‘Nigerians pay lowest taxes’

    Any country wishing to have good roads, an effective healthcare delivery, potable water and good transportation system should pay taxes, a tax expert has said.

    Dr Abdul Wahab Ibraheem, the Managing Director of Integrated Consultancy Management Accounting (ICMA), spoke at the Ikeja Golf Club during his 60th birthday, which the club hosted.

    His speech centred on the essence of taxes to infrastructural development.

    He said countries with high taxes enjoy higher infrastructural development than those with low tax payment.

    Dr Ibraheem said Nigerians were among the lowest tax payers in the world.

    The expert noted that besides a country with the lowest tax rates, Nigeria also lacked a tax payment culture.

    According to him, this is because Nigerians are not motivated to pay taxes.

     

     

     

  • Osun seals OAUTHC over unpaid taxes

    Osun seals OAUTHC over unpaid taxes

    The Osun State Internal Revenue Service has sealed the Administrative Complex of the Obafemi Awolowo University Teaching Hospital Complex (OAUTHC), Ile-Ife, over unpaid Pay-As-You-Earn (PAYE) taxes running into over N3.1 billion.

    The government was granted an order to seal the complex by an Osogbo High Court after the expiration of a seven-day ultimatum given to the hospital’s management to pay up.

    It was learnt that OAUTHC has not remitted taxes deducted from its staff to the state in six years, from 2006 to 2011.

    The Chief Medical Director (CMD), Prof. Sanya Adejuyigbe, and other management staff could not access their offices yesterday when The Nation visited the hospital.

    Workers, including the CMD, were seen in groups discussing the matter.

    Prof. Adejuyigbe said: “Since the new tax regime was introduced in 2005, the management is yet to implement it. We are using the old tax rate for our workers. Many of the staff affected by the development have retired from service. The new contributory pension scheme makes the unpaid tax to be bogus.

    “We urge the government to give us more time to reconcile the old tax rate with the new deduction. We cannot afford to pay the outstanding once. We should be allowed to spread the payment over eight years. All what we generate cannot settle the outstanding amount. The money is not available. We are hoping to put in place a tax committee to open up dialogue with the government and resolve the matter.”

  • Imo to recover unpaid taxes

    Imo State government has threatened to take all necessary steps to recover unpaid taxes by corporate institutions in the state.

    The Accountant-General of the state, Mr George Eche, said this in an interview with journalists in Owerri.

    According to him, the state government has directed the state Board of Internal Revenue to take necessary steps to recover unpaid taxes by corporate bodies.

    He described non-remittance of taxes to government treasury by some organisations as sabotage to the economy.

    He said Imo internally-generate revenue (IGR) was on the low side, adding that no state could survive in such condition.

    Eche said government had numerous projects ongoing but wondered how government could execute such projects without adequate IGR.

    “Everybody wants government to perform, but nobody wants to observe his fundamental obligations.

    “We will make sure that we take all necessary steps in tackling the matter,” he said.

    The Accountant-General said that government was prepared to use force on the defaulters.

  • Telcos pay N200b taxes yearly

    Telcos pay N200b taxes yearly

    Telecommunications firms operating in Nigeria pay an average of N200 billion in taxes yearly, the founder, Agusto & Co, Bode Agusto, has said.

    Speaking at EPIC Learning & Development Limited forum in Lagos, Agusto said the sector has been attracting billions of dollars, adding that its contribution to Gross Domestic Product (GDP) has risen from less than one per cent in 2001 to about six per cent in 2011.

    Also, in nominal terms, sales rose from about N30 billion in 2001 to N1.5 trillion in 2011 while job creation moved from hundreds to thousands.

    He said the telecoms sector “paid tax of over N200 billion to federal and state governments in 2012.”

    According to him, investment in infrastructure and entrenchment of sound corporate governance in the execution of Public-Private Partnership (PPP) are two critical factors needed to be achieved to boost the economy.

    He said though economic development is expected to improve in Nigeria in the next decade, an investment in infrastructure and proper implementation of PPP projects in Nigeria will place her ahead of other African countries.

    “There is need for significant investment in infrastructure. There is a lot of work to be done in infrastructure investment to enable Nigeria to realise its potential,” he said, adding that the government has no business in business, except acting as a regulator to the system.

    Agusto said PPP projects involve the delivery of infrastructure to the people and needs regular budgetary allocations for repairs and maintenance after completion.

    He said because political considerations outweigh economic considerations when planning and executing these projects, competitive users’ fees are not charged and used for the maintenance of these assets.

    He insisted that the key to improving the governance of major projects in Nigeria’s public sector lies in reforming the operating model for the executing, managing and delivering these projects.

    He advised that when executing major projects, particularly infrastructure projects, government should partner with the private sector because by doing so, economic and social considerations will outweigh political considerations.

    It also makes funds available to the project to improve while reporting will be more open and transparent. “There is also tendency that projects will be subject to timely independent audits annually while government will be able to act as a truly independent regulator,” he said.

     

     

     

  • Airline boss urges govt to reduce taxes

    Chief Executive Officer of Skyjet Aviation, Alhaji Kashim Shettima, has called on the Federal Government to reduce the multiple taxes charged charter operators by aviation agencies.

    He said it is one way to eliminate obstacles militating against the growth and development of the sector.

    Shettima, who spoke in an interview, explained that until such charges are reduced, operators will continue to grapple with high costs, which according to him has been disincentive to many investors in the sub sector.

    He also lamented the slow process of issuing operators licence, urging thatis should be fast-tracked as it is done in other parts of the world.

    He said his experience with while processing the airline’s Air Operators Certificate (AOC) with the Nigerian Civil Aviation Authority (NCAA), could be improved upon to facilitate business for charter operators.

    He said: “ You know aviation industry is not an easy industry where you can easily make money. It is an industry with a lot of challenges. There are aircraft issues and a lot of other challenges, including some government policies.

    “However, I think the minister of aviation is on the right track and she will take us to the place where we need to be.

    “But there is a serious challenge in this industry. Every time the government talks about attracting foreign investors, but there are lots of people in-house who are willing to invest in the country.

    “All they need is the support and enabling environment to do it and I believe that before foreign investors can come and invest here, you need to show them that your own people are doing it, then they would come and would want to partner with the indigenous investors.”

    Shettima added : “ The aviation industry in Nigeria still has a lot of challenges because I have seen it. However, I believe that at some point, the airline operators and the authorities need to sit down to look at issues critically.”

     

    “But so far, the minister of aviation has done her best in securing import duty waiver for us on aircraft and spare part importations. Until it was waived, it was only Nigeria that was paying that kind of duty on aircraft which is a lot of cost for the airlines to bear. For now I think we are on the right track.”

    >>> He said : “ Right now, one of the critical aspects is maintenance of our aircraft which is cost intensive. Another burden is the issue of taxes. We pay a lot of taxes especially some of us who are operating foreign registered aircraft.

    >>> But then I don’t understand why I should be considered foreign when I am investing money locally here in Nigeria. We have invested over $5 million in our facility here in Nigeria. I don’t understand why we keep paying high on landing charges and these are the things that can kill an airline. About 90 per cent of our employees are Nigerians and we create jobs.

    >>> The government or the agencies in the industry would have to consider all these. These are some of the challenges.”

     

  • Telcos bogged down by multiple taxes

    Telcos bogged down by multiple taxes

    For telecoms firms and other stakeholders in the Information Technology (IT) sector, multiple taxation and regulation is a real threat. The problem, they say, is affecting business and may force some to relocate to more conducive environment.
    LUCAS AJANAKU
    examines the issue, urging operators and authorities to close ranks for subscribers’ benefit.

     

    When Osondu Nwokoro, Regulatory Affairs Director, Airtel Nigeria, took the floor to address the gathering at the 2012 edition of the West African Information and Communications Congress (WAFICT), everyone listened to him.

    Nwokoro, who represented his boss, Rajan Swaroop, spoke on the twin-evil of multiple taxation and regulation, lamenting that operators were groaning under the yoke of heavy financial demands by ministries, departments and agencies (MDAs).

    According to him, independent tax consultants, working for the federal and some local and state governments, have been making life unbearable for telecoms firms through outrageous levies and taxes.

    “It is important that we understand that multiple taxation and regulation are two different issues. For instance, if a particular operator has a base station in a particular community, he is faced with the challenge of paying all manner of levies and taxes to different governmental agencies for just that base station. Also, he is faced with the challenge of multiple regulations from different government agencies.

    “At the end of the day, the customer is made to suffer for this as some of these agencies usually shut down base stations, thereby preventing engineers from performing routine maintenance work. Just imagine an operator with more than 2,000 base stations. Indeed, the impact is huge and customers are made to suffer unjustly,” he said.

    Osondu, like his colleague in MTN, Mrs Oyeronke Oyetunde, general manager, Regulatory Affairs, is also worried by this development. She identified multiple taxation and regulation as the twin-factor that impeded telecoms growth in the past.

    According to her, a situation where a local government area requires telecoms firms to pay about N10 million for the erection of base transmission station (BTS) besides other levies is not healthy for the industry.

    Mrs Oyetunde, who is also the vice chairman, Industry Working Group (IWG) on multiple taxation and regulation, a body comprising representatives of operators, regulators and subscribers, noted that because of delays in BTS roll-out, operators have been able to deploy only 20,000 BTS across the country. She argued that over 70,000 BTS would be required to provide acceptable levels of services.

    “If you have a local government demanding N10 million from an operator and you now multiply that by the number of local government areas we have in the country, you will see that this is unsustainable in the long run for operators.

    “It is either you kick them out of business or the operators are forced to pass the cost accrued to them through such illegal taxations to their customers in form of high tariff,” she said.

    For Mr Okey Itanyi, Executive Commissioner, Nigerian Communications Commission (NCC) and chairman, IWG, the matter is threatening to operators and foreign direct investment (FDI). Investors may also be compelled to seek a more conducive environment elsewhere.

    “The country may lose the gains and confidence achieved so far in the last couple of years. The industry still requires investment in network infrastructure to ensure full access across the country, and to guarantee good and acceptable quality of service, which has become a major challenge,” he warned.

    The IWG is working towards stopping the imposition of illegal taxes and levies on telecoms operators because of their perceived grave socio-economic implications. The group comprises the regulation agencies, operators and subscribers.

    Analysts argue that direct and indirect taxes are veritable sources of revenue to governments all over the world. They believe that there is nothing abnormal in the imposition of taxes on businesses to generate revenue. To them, tax imposition is a standard practice but a situation where there is a litany of indiscriminate charges from different quarters, both legal and illegal, is deplorable and constitutes a disincentive to business growth and expansion.

    No fewer than 12 states and the Federal Capital Territory (FCT), Abuja, impose multiple taxations on telecoms operators running into billions of naira.

     

    Outrageous taxes

    According to reports, the Abia State Infrastructural Development Fund Board is demanding N19 million from Airtel as infrastructure development levy. The Abia State Environmental Protection Agency/Yagazie Nigeria Limited is demanding from each mobile operator N300, 000 per new site as environmental support fee and Environmental Impact Assessment (EIA), registration the State Town Planning Authority is demanding N650, 000 per site as permit/processing fees.

    There is a new dimension to the problem in Imo State, where the Environmental Transformation Commission (Entraco) and the Town Planning Authority are demanding N262.4 million, pest/vector control fees and fumigation charges for 2008-2011 and N720,000 per site as permit fees.

    In Anambra, the Ministry of Environment and the state’s signage and Adverting Agency are demanding N500, 000 per site as EIA fees and N4.5million as outdoor advertising for BTS.

    In Edo State, Egor and Oredo local government areas see telecom operators as goldmine. They are demanding the payment of N24.75 million as tenement rate for 11 BTS, N16.25 million as operational/inspection fee for five BTS, while the Edo State Town Planning and Ministry of Commerce want the payment of N750, 000 and N650, 000 as site permit and business premise fees respectively.

    In the FCT, the Abuja Municipal Management Council has given a notice to MTN for the payment of over N257million as annual charge for BTS, the Bauchi State Signage and Advertising Management Agency has asked Airtel to pay N755 million as signage, branding and advert levy.

    In Cross River State, the Internal Revenue Service (IRS) and Town Planning Authority are demanding the payment of N510 million purportedly for BTS revenue from 2005-2010, N1.2 million as site permit per operator. The Katsina State Urban Development Authority is asking for N755, 000 as building permit and EIA fee.

    If the operators bow to the threats and pressures of the MDAs, they will be contending with multiple charges. They pay Annual Operating Levy (AOL) of certain percentage of earnings to the NCC and are required in addition to pay various rates and charges to Federal Government agencies, such as the Consumer Protection Council (CPC), Nigeria Lottery Commission (NLC), federal and state ministries of environment including authorities in every state and local government in which they operate.

     

    Stakeholders’ grouse

     

    Akinwale Goodluck, Corporate Services Executive, MTN, said in 2010 MTN has paid N43 billion as income tax to the government, contributed N15 billion to the NCC and paid N6 billion as education tax. It also contributed another N2 billion to National Information Technology Development Agency (NITDA) in spite of the existence of those spurious taxes and levies.

    Udemba Hyacinth, chief executive officer, Prostar Global Energy, said the burden of spurious taxes, levies and charges on goods and services are, ultimately, passed onto the final consumers and in this case, the subscribers who have to pay through the nose for low quality services. “The effects of multiple taxation and regulation on telecom industry appear to have overwhelming influence on every facet of our lives and transactions. The first is on the delivery of telecommunications services. The second is that it will discourage investors from investing in the industry,” Udemba told The Nation.

    Dr Sheidu Olanrewaju, lectruer, Economics Department, University of Lagos, agrees no less with Udemba. According to him, multiple taxation will discourage investment and make call tariff go up. “This will affect the entire business including the profit margin. Gross domestic product (GDP) will inevitably go down because instead of promoting business, it will discourage it.

    He said the Federal Government should regularise taxes while the National Assembly should promulgate laws that will harmonise and spell out the taxes that should be paid by telecom operators. “Taxes should be fair, just and ensure equity and should not discourage investment. It should not affect production and inevitably lead to unemployment,” he said.

    Omobola Johnson, Minister of Communications Technology, also acknowledges the crippling effects of the development. “The Ministry has put in motion collaboration with the Ministry of Environment and all indications are that we can, within a fairly short time, reduce the time it takes to obtain approval to erect a base station. There is an industry working committee on illegal taxes and levies that is putting together appropriate recommendations to curb illegal, punitive and unfair taxes on telecoms companies,” she said.

    According to IWG Position Paper on Hazards and Further Implications of Multiple Taxation and Regulation of the Communications Industry in Nigeria, in a brief provided by the sub-Committee on Legal and Judicial Reviews of the IWG on Multiple Taxation and Regulation, the challenges of multiple regulation and taxation faced by the communications industry has existed and been ventilated several times over the years. It added that the phenomenon inhibits the ability of telecommunications as an economic enabler and social overhead capital to impact positively on the attainment of the country’s developmental goals.

    According to the IWG, the successes recorded in the telecommunications industry in the last 10 years have reinforced the internationally acknowledged perception that communication is a powerful, progressive tool of socio-economic development with continued boost to socio-economic development in job creation, security and social cohesion while the impact upon culture and quality of life and the contribution to GDP are gains, which have been recorded by the industry as a direct result of the advent of mobile telephony in Nigeria.

    IWG regrets that while the sector has been a major catalyst for socio-economic development, it has become apparent that majority of the national stakeholders have failed to recognise the pivotal role played by mobile communications to the long-term socio-economic development of the nation by continuing to perceive the successes of the industry as opportunity to generate short-term and other immediate pecuniary benefits, a skewed perception that results in undue interference in the operations of communications networks by various strata of society, and particularly agencies of government.

    “These continued intervention in telecoms operations by MDAs results in disruption of services, degradation of service quality, major increase in operating expenses and the general cost of carrying on communications business in Nigeria. While we note that the untoward consequences of multiple and illegitimate levies/taxes is not born solely by the telecommunications industry, it is our cogent believe that the critical nature or services provided by the telecommunications sector requires urgent action to address these challenges before a total collapse of the telecommunications sectors is witnessed,” IWG noted.

    The situation is even so ridiculous as it is now common to have a telecommunications operator receive a ‘stop work order’ from a state or local MDA over a right of way (RoW) approval granted by a State or Federal MDA and to have state and local environmental MDAs reject an EIA certificate issued by the Federal Ministry Environment (FME) to insist instead on the telecommunication operator processing same with them. This occurrence is similar to the demands in Kaduna State by the Kaduna State Urban and Property Development Authority (KASUPDA) which insisted on conducting its own EIA.

    It noted that the associated setbacks and bureaucratic bottlenecks usually lead to project implementation delays that unduly increase the project cost, while occasioning network downtimes and quality of service issues among others. Besides multiple-taxation, which ultimately results, the situation presents significant regulatory discord that can ground telecommunications operations for months in severe cases with unsavoury implications for the national socio-economy.

    Udemba argues that the regime of taxes and levies ought to be ascertainable in order to assist planning and forecasting for business endeavours. “Taxes and levies form a veritable source of revenue for government, it is imperative that citizens should be able to determine or know in advance what taxes they are statutorily liable to pay. The computation of taxes and levies should therefore be based on clearly defined criteria, the absence of which negates regulatory propriety and certainty which negatively impact investors’ confidence and their subsequent investment decisions,” he argued. Udemba added that the phenomenon affects the perception of Nigeria as a preferred investment destination, with unfavourable consequences for the national economy.

    The IWG said that taxes and fees ought to be predicated on clearly defined criteria, stressing that where their collection presupposes that government is providing a public (regulatory or administrative) service, it is imperative that relevant MDAs provide that service. “Because the objective is typically to enhance internally generated revenues, the provision of the underlying regulatory or administrative service is usually relegated. For instance, state and local environmental authorities are quick to impose and collect fees for effluent discharge, fumigation, pest control and other environmental related services, without ever providing such services or only partially doing so,” IWG lamented.

    According to a GSMA Tax Study on sub-Saharan Africa, 2007, there is a negative correlation between tax and mobile penetration and as such, countries such as South Africa with low tax burden per connection (17.5 per cen) enjoy high penetration (97 per cent). The reverse is the case as countries such as Madagascar with high tax burden (23.5 per cent) have low penetration (9 per cent). From the report, it is clear that by removing mobile-specific taxes, mobile ownership and use will rise, stimulating wider economic growth; while the total tax receipt from the industry and indeed the wider economy will increase.

    The report revealed that tax receipts would increase by $930 million, rising from $28.9 billion to $29.9 billion, if the governments of some African countries including Nigeria, Kenya, Tanzania, Cameroon, Ghana, and Malawi removed all non-value added tax (VAT) mobile ownership taxes in 2007. It added that by 2012, Chad’s tax receipts would be approximately 30 per cent higher, Ghana’s 20 per cent and Nigeria’s 15 per cent higher. In the light of this, it is evident that multiple taxation of telecoms sector inhibits growth and penetration; stifles economic growth and constrains the creation of a value chain that is beneficial to socio-economic development.

    These, analysts say, invariably combine to limit tax revenues to government from direct and indirect value-addition as well as the wider economic impact of the sector on the economy.