A business software solutions company, Sage Africa, has warned that the upcoming Communication Service Tax, CST, Bill proposed by the Federal Government, and is currently with the National Assembly, will not augur well for Nigerian businesses.
Speaking last month at a function organized by the Lagos Chambers of Commerce and Industry, LCCI, the Minister of Communication, Bayo Shittu, stated that “The bill is considered as a way to help increase the revenue generation of the Federal Government”.
But APO reports the Regional Director for Sage in West Africa, Magnus Nmonwu, as stating that the CST Bill, if passed into law, will require that consumers of voice, data, SMS, MMS and pay TV services pay a 9 per cent tax on their tariffs for using these services.
He pointed out that this is in addition to other taxes people already pay for mobile and Internet access – 5 per cent VAT, 12 per cent import duties on ICT devices, and 20 per cent tax levied on SIM cards, amongst the series of taxes.
“Nigerian entrepreneurs depend on their mobile phones and the Internet to run their businesses,” Nmonwu said, adding that “The tax could potentially raise the cost of doing business and hold back Nigeria’s integration into the global digital economy by excluding people from broadband access.”
While acknowledging that the government needs to raise new tax revenues in the wake of falling commodity prices, the Sage Regional Director maintained that this should ideally be done in a way that nurtures the growth of the Small & Medium Business, technology and services sectors – especially at a time Nigeria needs to diversify its economy beyond oil.
He stated that emphasis should be placed on creating new tax revenues, citing an instance with a conditional tax amnesty which could encourage smaller businesses who have not complied with tax laws to fall into the tax net.
Nmonwu argued that by making short-term sacrifice of potential tax revenues, government could bring more businesses into the formal economy and help them grow into enterprises able to employ more people, approach banks for financing and pay taxes.
It would be recalled that the Nigerian arm of the global movement of people working together to promote human rights and defeat poverty, ActionAid Nigeria, had rejected the proposed Communication Service Tax, CST, Bill, warning that the imposition of the new tax would worsen the poverty situation of consumers.
Also, the Trade Union Congress of Nigeria, TUC, had requested the federal government to drop its planned introduction of new Communication Service Tax, CST, describing the proposed tax as an exploitation of the already impoverished masses, wondering how a worker earning the 18,000 minimum wage can pay the tax.
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