The proposed communication tax is one tax too many, and may trigger widespread reactions if the bill is eventually passed into law.
Although the ‘controversial’ Communication Service Tax bill has passed the first reading at the House of Representatives. The major telecommunications companies in the country are all against it, and have vowed to do all they could to resist it.
For the telecoms firms and subscribers, it is seen as a wrong approach to generating revenue amid a sinking economy and an impoverished people.
“We are going to mobilise the Nigeria Labour Congress, the civil society organisations and the entire nation against it.
“We shall bring the government of Nigeria to a standstill should the lawmakers at the National Assembly continue with the process of passing that bill into law.
“In fact, we must not even allow a second reading of the bill, or allow them to hold a public hearing, because most times when you allow them to hold a public hearing, they do so in secrecy just to ensure that people do not oppose their (lawmakers’) decision,” the President, National Association of Telecommunications Subscribers, Mr. Adeolu Ogunbanjo, told our correspondent.
Upon passage and assent, the CST bill, which is currently in the Senate, will compel telecommunications service subscribers, including satellite television providers like DSTV, to pay additional tax on services rendered by their providers.
The others include GoTV, Startimes, CONSAT and other telecoms operators. Services such as voice calls, SMS, MMS, data and pay TV will all have an additional nine per cent tax imposed on the services; meaning that the subscribers will pay the usual cost of service, plus nine per cent of that cost.
“It is one tax too many. Already, there are 26 different taxes being paid by Nigerians. Again, all the various components of telecoms are being taxed; for instance, the Subscriber Identification Module card, handsets, among others, take about five per cent tax already,” Ogunbanjo said.
He said, “Again, the cybercrime tax that was signed into law last year takes 0.5 per cent of tax.
“Also, when the operators want to lay their fibre optic cables in Lagos, they pay a minimum of N500 per metre tax. And by the time they have laid the cables in several metres, that would have amounted to millions of naira in tax.
“It is even worse outside Lagos, where operators are charged many times over what they pay in Lagos.”
Business leaders, notably the Lagos Chamber of Commerce and Industry, say the Federal Government needs to balance its drive for taxation against the demand of the private sector to have a friendly business environment.
“We know that the government is seeking to diversify its revenue base. But it is also true that the private sector players would like to see an investment-friendly environment, especially in the light of the prevailing high cost of doing business in the country,” the LCCI President, Nike Akande, said.
According to her, the chamber believes that it is in the best interest of Nigerians to have a virile, robust and growing economy. “Creation of a good business environment is imperative to making this proposal happen,” Akande said.
The Partner at PricewaterhouseCoopers, Taiwo Oyedele, said the proposed communication tax as it affects the firm would be over N20m per month.
“But then they have constructed the bill on wrong assumptions and have overestimated, because if the tax on communication and Internet services will be increased, then definitely the users of these services will drastically decrease, resulting in them making way less than they anticipated and estimated,” Oyedele said.
He said research had proved that Nigeria was one of the lowest tax-compliant countries, despite having a population of about 180 million people.
“There are only 10 million taxpayers from the 36 states. Therefore, we expect that policies made should leverage the telecommunications sector to help expand tax rate, not imposing tax on telecommunication services, thereby discouraging the sector instead of encouraging it,” he said.
He stated that the government should focus more attention on tax evaders and increase the number of taxpayers, rather than imposing taxes on telecommunications, which might end up retarding the wheel of progress in the economy and country as a whole.
The President, Association of Licensed Telecoms Operators of Nigeria, Gbenga Adebayo, said the proposed law would lead to a decrease in the flow of revenue, as investors would take their investments to other countries with lower tax rates.
“Nigeria needs investment so as to provide employment, especially to our growing youth. Owing to that increase in call rate, there will be drastic reduction in the composition of data usage, as well as voice call, SMS, MMS, pay tax and the like, which will reduce usage and the country’s GDP,” Adebayo said.
“ALTON’s position as regards the nine per cent tax is that when the legislature is drafting policies, the policies should be investment-friendly, which will in turn be beneficial to the whole country and economy at large,” he added.
Meanwhile, findings from investigations conducted by our correspondent show that while Nigeria’s tax rates are not the highest comparatively, the country is doing very poorly in terms of the time taken to comply and the number of payments (which together impact negatively on the ease of doing business and investor confidence).
However, the Minister of Communication, Adebayo Shittu, said there were many areas in Nigeria where there were no access to Internet, to telephone and the like.
“By 2018, we hope to have accomplished 30 per cent of widespread use of telecommunications in all the areas of Nigeria, but presently, we have accomplished only 10 per cent. But then there is a probability that with the nine per cent tax rate charge, accomplishing this will be almost impossible,” Shittu said.
A top executive in one of the four major telcos in the country described the communication tax as a “Greek gift.”
Pleading not to be mentioned, he said, “In fact, that is a Greek way of internally generating revenue, because you cannot claim to be alleviating the sufferings of the people, yet you turn back to take whatever you must have given to them.”
The idea to go ahead with the passage of the bill, despite earlier resistance, may have pitted the telecoms firms against Shittu.
According to the telcos, the feeling is that Shittu has done little or nothing to stop the lawmakers from moving to pass the bill.
Another telecoms employee, who spoke on condition of anonymity, said, “If the minister, despite our pleas for understanding, could still remain calm, even in the midst of the hardship being experienced by Nigerians (subscribers), then it is obvious that he (the minister) has got nothing to offer the country.”
He added, “The minister had better take a bow now, than remain in office and preside over the collapse of the 2018 project that is aimed at deepening broadband penetration in the country.
“Can you deepen broadband penetration by denying Nigerians access to the Internet and making it difficult for them to make calls?”
At a time when the drive should be intensified to attract investors – local and foreign – to commit their resources to rescuing the troubled economy, concerned Nigerians are worried that the lawmakers are seeking to enact laws that will introduce disincentives.
The proposed CST will not only deter new investors from coming into Nigeria, but it will also force the current foreign investors to stagnate further investments.
According to a telecoms analyst, Constance Azuru, the CST is not a wise move from an investor’s perspective.
“The CST bill is retrogressive for an economy that requires help from all fronts to alleviate the sufferings of its people, the same people who will now be further taxed,” Azuru said.
Oil Prices Hold Steady Ahead of Crucial OPEC+ Meeting Amidst Fed Rate Hike Signals
Oil prices maintained their significant gains as traders anticipate the outcome of a crucial OPEC+ meeting on supply while considering signals from the Federal Reserve regarding interest rate policies.
Global benchmark Brent hovered below $82 a barrel, having surged over 2% on Tuesday, while West Texas Intermediate traded under $77.
The OPEC+ meeting, scheduled for Thursday to set policies for 2024, is currently grappling with a dispute over output quotas for some African members.
The recent rise in crude prices is underpinned by a weakening dollar, with a Bloomberg gauge of the US currency reaching its lowest level since August.
Federal Reserve policymakers, including Governor Christopher Waller, have hinted at an impending pause in the series of rate hikes, contributing to the bullish sentiment in oil markets.
A softer dollar enhances the appeal of commodities for international buyers.
Yeap Jun Rong, a market strategist for IG Asia Pte in Singapore, commented on the interplay of factors, stating, “The US dollar was dragged lower on a build-up in dovish expectations, which was very much cheered on by oil prices.”
However, concerns persist about OPEC+’s ability to address the challenges in the oil market effectively.
Despite the recent gains, oil is on track for a consecutive monthly decline due to increased supply from non-OPEC countries, intensifying pressure on the cartel and its allies to consider more significant output cuts.
The International Energy Agency’s earlier assessment indicated a potential return to a global crude surplus in the coming year.
In the US, the American Petroleum Institute reported a 817,000-barrel decline in nationwide inventories last week, potentially marking the first drop in six weeks, pending confirmation from government data.
This development may add support to oil prices and impact the ongoing dynamics in the energy market.
Oil Prices Stabilize as OPEC+ Weighs Deeper Output Cuts Amid Global Supply Concerns
Market Evaluates OPEC+ Decision Amidst Bearish Sentiment and Global Supply Worries
A Relaxed Start to the Week But Much More to Come, OPEC+ Eyed
By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA
It’s been quite a calm start to the week which isn’t entirely surprising given the lack of events on the calendar today. That said, things are expected to pick up with the rest of the week serving up some big economic releases and a hugely important OPEC+ meeting.
All data now, particularly that of the US, is being looked at through the prism of what it will mean for the final central bank meeting of the year and the new projections it’ll be accompanied by.
Since the last meeting, the data has been encouraging and we’ll get another batch before the Fed meets on 13 December. This week we’ll get the October PCE inflation data – the Fed’s preferred measure – as well as third quarter GDP, ISM manufacturing and jobless claims.
Outside of the US, we’ll get flash HICP inflation data for the eurozone, PMIs from China, CPI figures for Australia and a rate decision from the RBNZ. On top of all that, there’s a plethora of central bank speakers making appearances which will keep us on our toes.
BoE Governor Bailey got the week off to a start on that front, pushing back against expectations for rate cuts from Q2, claiming he doesn’t expect any for the “foreseeable future”. A vague commitment as ever but all we can expect from policymakers for now. There’s still a way to go and as Bailey highlighted, getting from peak to now is likely to be much easier than from here to 2%.
Oil choppy ahead of Thursday’s OPEC+ meeting
Arguably, the OPEC+ meeting will be the week’s most impactful event. Not just because any decision could have direct consequences for price and therefore inflation but also due to the meeting already being pushed back by four days, so there’s clearly some disagreement within the alliance.
The group has always found a way to get an agreement over the line before, even if that means the biggest producers taking on more of the additional commitments so it’s probably safe to say something similar will be achieved this week. But the question is how far they’ll push it, given the recent trend in oil prices and increasing concerns around global growth next year.
Gold eyeing record highs?
Gold has got the week off to a strong start, up around half a percent and hitting a six-month high. It just about managed to end last week above the psychologically challenging $2,000 level – where it’s repeatedly been pushed back from over the last month – and it seems that has propelled it on today.
We’re still seeing some push back though but this break has been backed by softer US data in recent weeks and less hawkish commentary from the Fed. That may be the difference this time around and enable it to look up towards record highs, only a few percent above where it currently finds itself.
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