It has been brought to our attention the reemergence of 9% Communications Service Tax (CST) that was previously suspended by the 8th National Assembly during the intervention of ATCON NEC to the Senate President on November 8, 2016 whereby it was acknowledged by the distinguished Senators that the growth of ICT is critical to the creation of jobs and reduction in youth unemployment. The Senate President agreed and assured ATCON and members at large that the tax would be set aside. In attendance at the meeting were Rt Hon. Bukola Saraki, Senate President of the 8th National Assembly, then Chairman and Vice Chairman of the Senate Committee on Communication, Senator Gilbert Nnaji and Senator Solomon Adeola Olamilekan respectively.
ATCON then recommended to government that the tax base of the country should be widened to include more tax payers. It was noted that only 13 million out 70 million were contributing to the tax revenue of the federal government. Since 2016, Nigeria has under gone a recession and experienced low GDP growth rate coupled with government recurrent expenditure that now exceeds oil revenue. Therefore we understand that measures to shore up government income in the way of taxes should be explored. However, government needs to also consider a reduction in the cost of governance that will fit within the new government revenue generated through taxes and oil receipts. It is inconceivable that a CST Bill of 9% that was put aside which is a direct copy of Ghana’s CST is now being pushed through the National Assembly without due consultation with all stakeholders and it is especially targeted at the telecoms and ICT sector.
The impact of the adoption of 9% CST bill is that it is a double tax on voice, sms and data service as 5% VAT already applies on these services. This represents an additional burden when applied to a subscriber base of 173million. If the passage of this bill goes through it would negatively impact Nigerians and foreigners that use these services. The implementation of this CST bill would take the affordability of data services out of the reach of the citizenry. Therefore, ATCON recommends that government reconsiders the passing of the bill, as it would add to the burden of the already suffering Nigerians. It is deemed as an additional multiple tax, loss of revenue to the industry and can lead to loss of jobs in the sector.
We reiterate that the burden of shoring up government revenue should be across all segments of society in the way other climes use VAT and not to be targeted to a specific sector.