Market News

By Emma Okonji

The federal government has unveiled a fresh plan to introduce excise duty on telecoms' airtime charges.

A report yesterday by Reuters said Nigeria was considering introducing an excise tax on telecoms airtime charges as a way of boosting revenue for the cash-strapped nation.

The report quoted the Director-General of the Budget Office of the Federation, Mr. Ben Akabueze, as unveiling the plan at a World Bank event where the need for the federal government to raise additional revenues was discussed.

"Last year, we found that 51 countries in Africa have excise on airtime charges, so we are looking at that as well as an area to tax," he said.

But in a swift reaction, telcos under the aegis of the Association of Licensed Telecoms Operators of Nigeria (ALTON), have kicked against the fresh plan, saying that it will lead to double taxation that has slowed down telecoms growth in the past.

Reacting to the statement attributed to Akabueze, the Chairman of ALTON, Mr. Gbenga Adebayo, said since the purpose for the planned introduction of excise tax on telecoms airtime charges were not clear to industry players, telecoms operators would rather wait to see how the federal government intends to introduce an excise tax on airtime recharges.

He stated that the proposed tax will amount to double taxation because there is existing value-added tax (VAT) on all telecoms airtime recharges.

He said: "It is not clear to telecoms operators why the federal government wants to introduce an excise tax on telecoms airtime recharge. Excise duty is introduced in manufacturing goods and it is introduced when the government wants to reduce the intake of such manufactured product. Except the federal government wants to discourage importation of recharge cards into Nigeria in order to encourage telecoms operators to use alternative means of vending airtime, like the virtual top-up that does not need a physical recharge card.

"For example, it will be understandable if the federal government decides to introduce an excise tax on consumption of tobacco product because it wants to reduce the consumption of tobacco in Nigeria because of the health implications, but it will be out of place for government to introduce an excise tax on telecoms airtime."

He added that the telecoms sector remains the only sector that has not increased charges on services and airtime charges since the launch of Global System for Mobile Communication (GSM) and warned that any attempt to introduce an excise tax on telecoms airtime recharge would negatively affect telecoms services offerings across networks.

"Government should be careful not to introduce additional burden on telecoms operators," Adebayo said.