The Organised Private Sector (OPS) has expressed concerns over the proposed plan by the federal government to impose a special tax of nine per cent for the use of communication services, noting that this move would only succeed in worsening the prevailing high cost of doing business in the country.
The operators under the telecommunications arm of the Lagos Chamber of Commerce and Industry (LCCI) said the economic implications of this bill would affect consumer purchasing power which they say negates the principle of neutrality, maintaining that it would also discourage investment and impede development of the telecommunications sector.
They posited that the bill potentially creates and raises the issue of double taxation since Value Added Tax (VAT) Act already imposes tax of five per cent on the supply of goods and services, calling for the suspension of the bill to allow for the rapid growth of the telecommunications sector in line with the Nigerian National Broadband Plan.
However, the Minister of Communications, Mr. Adebayo Shittu, stated that the bill which is before the Senate and House of Representatives, have commenced the legislative process to enact the bill which he said has passed its first reading.
The minister during the private sector dialogue session on the proposed communication services tax bill organised by the LCCI, stated that according to many schools of thought, the bill seeks to impose additional charges on users of electronic communication services in Nigeria.
He added that the proposed national ICT roadmap is poised to set out the intent and commitment of the government to continue the development of the ICT sector and implement the sector policies and plans in an integrated, focused and innovative manner that aligns with the change mantra of the current administration.
Shittu pointed out that the present administration’s goal is to provide cost effective, ubiquitous ICT access for overall national development, stating that as government plans to increase revenue, makes the bill worthy of consideration.
“I have been reliably informed that the projected earnings from this effort is over N20 billion every month, which is an attraction to the government in funding our budget deficits. I must be quick to say that this government has got a human face twined around its decisions,” he said.
The president, LCCI, Dr. Nike Akande, acknowledged the fact that the government is seeking to diversify its revenue base in the light of the dwindling oil revenue, but stressed that the private sector players would like to see an investment friendly tax environment, especially in the light of the prevailing high cost of doing business in the country.
She said the ICT sector is very strategic to sustainable growth and development, adding that the sector has witnessed an impressive growth over the last one decade.
She said according to the Nigerian Communications Commission (NCC), Nigeria has become the largest telecoms market in Africa and the Middle East.
Meanwhile, the Partner, West Africa Tax Leader, PWC, Mr. Taiwo Oyedele, said the timing and the concept behind the bill could have been better, saying that making decisions without empirical evidences will only lead to wrong decisions.
He added that engagement with stakeholders in the industry and the users of the services have not been taking into consideration, saying that stakeholders must give their views before such bill is passed into law.
In another development, Shittu has said government would realise N240 billion annually from the proposed Information Communications and Technology (ICT) service tax to be introduced by government.
The ICT service tax bill which is currently pending before the National Assembly will apply to voice calls, SMS, MMS, data and pay viewings channels.
While urging for support for the quick passage of the bill, he said, the money generated from the tax will be used by government in funding its deficit budget.
He said: “Our appetite as a government to increase revenue makes this bill worthy of our consideration.
“I have been reliably informed that the projected earnings from this effort is over N20 billion naira every month, which is an attraction to the government in funding our budget deficits.
“I must be quick to say that this government has got a human face twined around its decisions.”
This was contained in a statement signed by Mr. Victor Oluwadamilare, on behalf of the minister, in Abuja, said the extra 9 percent tax to be paid by subscribers of telecommunications service.
While admitting that the proposed tax has generated some concern, he said: “The proposed bill said a section of the stakeholders have extrapolated that the bill seeks to impose additional nine per cent charges on users of electronic communication services which is to be remitted to the Federal Inland Revenue Service (FIRS), on a monthly basis.
According to him, the International Telecommunications Union (ITU) gave Nigerian the mandate to achieve 30 percent broadband penetration by 2018, adding that the target is only two years away.
“In spite of the huge investment by the government and industry operators, Nigeria has achieved only 10 per cent broadband penetration at the moment.
“If we are to catch up with lost ground and meet up with the expectations of the global community in the area of affordable broadband service, we have to incentivize the populace by helping to aid access to low cost data service subscription.” he said.
Shittu, however urged stakeholders in the sector to have a holistic deliberations on the communication services tax as being proposed in the ICT bill pending before the National Assembly.
The minister, said the goal of the ministry is to provide cost effective ubiquitous ICT access for overall national development, adding that the proposed solutions are the passage of the Critical National ICT sector infrastructure bill, hastening of the rollout of metro fibre networks, use of NIGCOMSAT Satellites to bridge the rural penetration gap and hosting of critical National Data within the country.
Brent Crude Oil Approaches $70 Per Barrel on Friday
Nigerian Oil Approaches $70 Per Barrel Following OPEC+ Production Cuts Extension
Brent crude oil, against which Nigerian oil is priced, rose to $69 on Friday at 3:55 pm Nigerian time.
Oil price jumped after OPEC and allies, known as OPEC plus, agreed to role-over crude oil production cuts to further reduce global oil supplies and artificially sustain oil price in a move experts said could stoke inflationary pressure.
Brent crude oil rose from $63.86 per barrel on Wednesday to $69 per barrel on Friday as energy investors became more optimistic about the oil outlook.
While certain experts are worried that U.S crude oil production will eventually hurt OPEC strategy once the economy fully opens, few experts are saying production in the world’s largest economy won’t hit pre-pandemic highs.
According to Vicki Hollub, the CEO of Occidental, U.S oil production may not return to pre-pandemic levels given a shift in corporates’ value.
“I do believe that most companies have committed to value growth, rather than production growth,” she said during a CNBC Evolve conversation with Brian Sullivan. “And so I do believe that that’s going to be part of the reason that oil production in the United States does not get back to 13 million barrels a day.”
Hollub believes corporate organisations will focus on optimizing present operations and facilities, rather than seeking growth at all costs. She, however, noted that oil prices rebounded faster than expected, largely due to China, India and United States’ growing consumption.
“The recovery looks more V-shaped than we had originally thought it would be,” she said. Occidental previous projection had oil production recovering to pre-pandemic levels by the middle of 2022. The CEO Now believes demand will return by the end of this year or the first few months of 2022.
“I do believe we’re headed for a much healthier supply and demand environment” she said.
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Oil Jumps to $67.70 as OPEC+ Extends Production Cuts
Brent crude oil, against which Nigerian oil is priced, rose to $67.70 per barrel on Thursday following the decision of OPEC and allies, known as OPEC+, to extend production cuts.
OPEC and allies are presently debating whether to restore as much as 1.5 million barrels per day of crude oil in April, according to people with the knowledge of the meeting.
Experts have said OPEC+ continuous production cuts could increase global inflationary pressure with the rising price of could oil. However, Saudi Energy Minister Prince Abdulaziz bin Salman said “I don’t think it will overheat.”
Last year “we suffered alone, we as OPEC+” and now “it’s about being vigilant and being careful,” he said.
Saudi minister added that the additional 1 million barrel-a-day voluntary production cut the kingdom introduced in February was now open-ended. Meaning, OPEC+ will be withholding 7 million barrels a day or 7 percent of global demand from the market– even as fuel consumption recovers in many nations.
Experts have started predicting $75 a barrel by April.
“We expect oil prices to rise toward $70 to $75 a barrel during April,” said Ann-Louise Hittle, vice president of macro oils at consultant Wood Mackenzie Ltd. “The risk is these higher prices will dampen the tentative global recovery. But the Saudi energy minister is adamant OPEC+ must watch for concrete signs of a demand rise before he moves on production.”
Gold Hits Eight-Month Low as Global Optimism Grows Amid Rising Demand for Bitcoin
Gold Struggles Ahead of Economic Recovery as Bitcoin, New Gold, Surges
Global haven asset, gold, declined to the lowest in more than eight months on Tuesday as signs of global economic recovery became glaring with rising bond yields.
The price of the precious metal declined to $1,718 per ounce during London trading on Thursday, down from $2,072 it traded in August as more investors continue to cut down on their holdings of the metal.
The previous metal usually performs poorly with rising yields on other assets like bonds, especially given the fact that gold does not provide streams of interest payments. Investors have been jumping on US bonds ahead of President Joe Biden’s $1.9 trillion coronavirus stimulus package, expected to stoke stronger US price growth.
“We see the rising bond yields as a sign of economic optimism, which has also prompted gold investors to sell some of their positions,” said Carsten Menke of Julius Baer.
Another analyst from Commerzbank, Carsten Fritsch, said that “gold’s reputation appears to have been tarnished considerably by the heavy losses of recent weeks, as evidenced by the ongoing outflows from gold ETFs”.
Experts at Investors King believed the growing demand for Bitcoin, now called the new gold, and other cryptocurrencies in recent months by institutional investors is hurting gold attractiveness.
In a recent report, analysts at Citigroup have started projecting mainstream acceptance for the unregulated dominant cryptocurrency, Bitcoin.
The price of Bitcoin has rallied by 60 percent to $52,000 this year alone. While Ethereum has risen by over 660 percent in 2021.
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