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Subscribers kick as FG slams N90.49b new tax on phone calls

SUBSCRIBERS to telecommunications services are protesting a new Federal Government mandate to levy a charge on phone calls in the country to support free healthcare for the poor.

According to the National Health Insurance Authority Bill 2021, which was signed by Buhari last week, a telecom tax of at least one kobo per second for phone calls is one of the sources of funds required to finance free healthcare for Nigeria’s Vulnerable Group.

Nigerians made 150.83 billion minutes of calls in 2020, according to the Nigerian Communications Commission. This amounts to 9.05 trillion seconds of calls, implying that the new tax will yield 9.05 trillion kobo annually, or N90.49 billion.

Despite telecom firms’ efforts to raise the price of calls, SMS, and internet by 40% due to an unfavorable operating climate, this new tax is coming.

The Vulnerable Group Fund is money earmarked to pay for healthcare services for vulnerable Nigerians who cannot afford health insurance, according to the Health Insurance Act, in order to subsidise the cost of providing health care services to vulnerable persons in the country.

The Vulnerable Group Fund, it added, will subsidize healthcare for children under the age of five, pregnant women, the elderly, physically and mentally challenged, and the impoverished, as determined from time to time.

A telecommunications tax of not less than one kobo per second of GSM calls shall be one of the sources of money for the Vulnerable Group Fund, according to Section 26 subsection 1c of the Act.

A basic healthcare provision fund to the authority; health insurance levy; telecommunications tax, not less than one kobo per second of GSM calls; money that may be allocated to the Vulnerable Group Fund by the government; motley that accrues to the Vulnerable Group Fund from investments made by the Council; and grants, donations, gifts, and any other voluntary contributions made to the Vulnerable Group Fund are some of the other sources of funding outlined in the Act.

Every Nigerian citizen is required to get health insurance under the new law.

Telecom subscribers, represented by the National Association of Telecoms Subscribers, have stated that they will oppose the government’s latest decision.

The President of the association, Adeolu Ogunbanjo, said, “It is quite unfortunate that the government is viewing telecoms as a cash cow. We are saying. There is a lot of corruption in the system, and rather than curb that they want to focus on the telecoms sector.

“What do they mean by vulnerable? Vulnerable people in the nation are probably about 80 per cent of the population, we are all vulnerable. What has happened to the health budget? Why should it touch telecoms again? The government should look elsewhere for money. This new action is only likely to impoverish more Nigerians and they are masquerading as helping the vulnerable. This is not right.”

Telecom businesses have appealed to the Federal Government, via the Nigerian Communications Commission, about the industry’s deteriorating conditions.

According to a source at the Nigerian Association of Licensed Telecommunication Operators, telecom businesses are unable to refuse a government decision. Subscribers would pay extra for calls once the levy is enforced, according to the source.

He went on to say that the NCC and ALTON would meet this week to talk about the difficulties plaguing the business.

He said, “We are aware of the tax. We had been told before. It is the subscribers that would have to pay for this. This means subscribers will pay more for this service. Telcos cannot say no to this. It is a government directive; we can’t resist the government. I can’t say more about it.

“We are having a leadership summit with the NCC this week and we would discuss some of these issues with the NCC. Presently, telcos are paying more than 36 taxes. This is a law; we cannot reverse it. The president has signed it and before it can be changed, it must go back to the National Assembly.

“Also, we cannot give an implementation date, the government is to tell us that.”

Taiwo Oyedele, a Fiscal Policy Partner and Africa Tax Leader at PricewaterhouseCoopers, wrote on his LinkedIn profile that the new law will result in a nine percent tax on GSM calls.

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