Pantami Explains Why FG Suspended 5% Excise Tax on Telecom Services

The Federal Government on Monday suspended the controversial 5% excise duty on telecommunication services recently announced by the Ministry of Finance and Nigerian Customs.

Isa Ali Pantami, minister of Communication and Digital Economy

The suspension was made known by the Minister of Communications and Digital Economy, Isa Pantami,  during the inaugural meeting of the Presidential Committee on Excise Duty for the Digital Economy Sector in Abuja.

The minister, while announcing the decision, explained that the telecommunications sector is already overtaxed with multiple taxation.

This is even as he directed that a committee to be constituted to look into the matter carefully and advise him carefully.

It would be recalled that the ministry of Finance and the Nigerian Customs Service through the had recently at a stakeholders’ engagement announced plans that it would commence   the implementation of its proposed  5% exercise duties on telecommunication services and beverages in 2023.

But in a swift reaction, the CDE Minister kicked against the move, which he said would increase the cost of telecommunication services and increase for Nigerians and widen gap in access.

“It is because of my intervention that the President have grant my prayers, no one immediate suspension of excise duty in the digital economy sector, and no two he approved that a committee be constituted to look into the matter carefully and advise him accordingly. This committee is to be chaired by the Minister of Communications and Digital Economy.

“The president has appointment me to be his eyes and ears in the sector and it is my responsibility to ensure we are just and fair to the operators, government and most importantly our people that are the consumers,” the minister said.

Speaking further on how he presented the case to the president on the possible effect of the excise duty on the sector, Pantami, “Of recent it was announced that some of our respected brother and sister (government officials), kick started the process of introducing excise duty in the telecom sector in which there and then, based on the constitution and being the representative of president Buhari in the sector. I rejected that whole heartedly being the representative of the president.

“I formalized my position and explained to him in a letter that could be referred to as a petition, (reasons; excise duty is usually fixed on luxury products.

“I told the president (in the letter) that if care is taken that attempt will destroy the digital economy sector that is becoming the backbone of our economy.”

On why he kicked against the excise duty, the minister said, “Despite our achievements we have been recording some challenges in the sector and if care is not taken these challenges could be a barrier in the development of the sector in the next few years to come.

“One of them; excessive taxes and sometimes multiple taxation.  As it is today in the tax category of ICT sector (39) which is very worrisome. But as of today, the ICT sector is over burdened by so many categories of taxes to the extent that today there are 41 categories of taxes at the federal and state level, particularly in the telecom sector. Some at federal level and some at state level.

“Beside these taxes are multiple taxes (the same taxes being collected at the federal is also what the states are insisting be paid to them. If care is not taken this is what will jeopardize the achievements and gains that we have recorded so far in the sector.”

Speaking further, the minister noted that prices of products and services in other sectors had increased significantly but the prices of products and services in the telecom sector remained unchanged in the last three years.

‘’The mobile Network Operators looking at things outside our sector like petroleum products, exchange rate, inflation, devaluation of the currency among others have been coming with many initiatives asking the regulator to allow them review their prices upward. In these three years, there were more than 15 attempts to increase the price of telecommunications services and in all of them I retained my position; saying no.

“And whenever the regulator escalates the matter to me; I will always encourage and urged them to try and persevere with the little profit they are making because the current economic situation in Nigeria doesn’t allow us to continue to add burden on our poor citizens that our suffering and can hardly get three square meals in a day and broadband and telecommunications services are becoming a necessity that a luxury, Pantami said.

Meanwhile, the Minister of Communications and Digital Economy will serve as Chairman of the Committee.

Members of the committee include: Pantami Chairman, while the Minister of Finance and National Planning,  Chairman, Federal Inland Revenue Services (FIRS), Executive Vice Chairman (EVC) of the Nigerian Communications Commission (NCC) and Representative of all Telecom companies in Nigeria.