Telecoms Excise Duties And Avoidable Controversies

Telecom Mast.

Communications and Digital Economy Minister, Dr.Isa Pantami appears to have good intentions as he spiritedly canvassed for a reversal of the five percent excise duties on telecommunications services but he was seen to be overly grandstanding by his approach.

Finance Act 2020 prescribed the duties among others to be collected by the Nigerian Customs Services (NCS) but Pantami felt he could over rule that Act by his connection to the Presidency.
He said he was not consulted before the decision was taken. He spoke to condemn the excise duty and vowed to resist it to the end.

He got Presidential permission to set up a committee to review the excise duty position.Strangely he made himself Chairman of that committee.And that was his first road to failure .As Chairman of the Committee he became a judge in his own cause.Legal minds understand the nature of the judgment that will come from this contrived committee. Even industry regulators, the Nigerian Communications Commission (NCC) had no imput as the Minister ran the race alone.

And after all the rigmarole,and running in a circle,the Minister obtained ‘a blackmarket’ approval to suspend the excise duties on telecommunications services.

But unfortunately for him and his “ good “ intentions,Pantami didn’t take into consideration the reality of the Finance Act 2020 ,an act of Parliament which could only be overruled by Parliament and not the President.

So, Finance, Budget and National Planning Minister,Hajia Zainab Ahmed, announced recently that the excise duty collection takes effect June 1,2023.

And so Pantami lost another ambitious pursuit to play “god” like in other areas of telecommunications since 2019 where he saw the sector as a conquered territory.

In March, 2023, he announced that the government had exempted the sector from excise uties following his “convincing“ argument. However, the recent fiscal policy measures for 2023, as revealed in a circular dated April 20, 2023, and signed by the Finance,Budget and National Planning Minister Ahmed, suggests otherwise.

Mrs Ahmed specifically said, in the working circular titled: ‘Approval for the Implementation of the Fiscal Policy Measures and Tariff Amendments’, the Minister confirmed the implementation of the excise duty on telecommunication services earlier introduced via the Finance Act 2020 and prescribed in the Official Gazette No. 88, Vol. 109 of 11 May 2022 approved by the President.

Specifically,the Finance Minister wrote:
“the excise duty rate on telecommunications services remains as approved by Mr.President and published in the official gazette No.88 vol 109 of May 11,2022”.

What this means is that,though Pantami may have meant well,but approached the matter by achieving the answer before the question arrived.

In other words,can Mr President over ride the National Assembly even though he has good intentions? This controversy was avoidable if he was conscious enough to t remove pride and the arrogance of connections to high and mighty.

Pantami simply disconnected the social equilibrium by taking up the role of a god and today telecommunications subscribers and operators may have to grapple with the unfortunate realities of paying extra 5% excise duties despite the existing 7.5% Value Added Tax(VAT).
By May 29,2023 ,he will be out of office and leave the rest of us to cope with what was avoidable if it was properly managed.

Analysts blame the situation on lack of diplomatic approach and hence the impending loom.This is sad. The government listed the 5% excise duty on telecom services as one of the fiscal measures to implement this year.
The new fiscal policy measures also include excise taxes ranging from 20% to 100% increases on previously approved rates for alcoholic beverages, tobacco, wines, and spirits effective from June 1,2023.

The tax is applicable on mobile telephone services, fixed telephone services, and internet services—both postpaid and prepaid.

Network service providers had reasoned that their customers would have to bear the cost of the new taxes as this has left consumers bewildered by the government actions especially coming at a time when the country’s inflation rate has risen to about 22.04% —the third consecutive increase in 2023.

Pantami explained in March 2023,that the exemption was in line with the recommendations of a committee, the Presidential Review Committee on Excise Duty in the Digital Economy Sector, which was constituted to review the implementation of excise duty in the telecom sector.He chaired that review committee.

“I am happy to report to you that President Muhammadu Buhari, GCFR, has approved the exemption of the digital economy sector from the five per cent excise duty to be paid and this is because of the strength of the argument presented to him by the Committee that additional burden on telecom sector will increase the sufferings of Nigerians and that other sectors that are not making as much contribution to the economy should be challenged to do more and pay the five per cent excise duty,” Pantami said on March 21,2023.

Pantami,s office countered the excise duties last week saying the “Honourable Minister of Communications and Digital Economy, hereby assures the sector and the general public that the President’s approval, supercedes all other declarations regarding the issue and we stand by it. Any contrary proclamation should be disregarded by the general public.”

The statement further recalled that the Minister “has vehemently opposed the proposed 5% Excise Duty for Telecommunications Services, on the grounds that it is unjustifiable, as it will be burdensome for the citizens of the country.”

But will the Minister’s resistance without any force of law survive? We wait.

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