New Policy on VAT and Taxes, Not Favourable to Common Man

The bill for an Act to establish tax on Communication and Cable Television services has just scaled the first reading at the senate. The bill, which was sponsored by a former Senate leader, Ali Ndume, it is believed, will replace the 2.2% increase in the Value Added Tax being planned by the Federal Government.

According to Ndume, the imposition of tax on communication service is a better way of distributing wealth in such a way that would not affect the ordinary people. Increasing VAT, he said, would have very devastating effects on the economy as it would raise prices of goods and services.

It also stipulates that the Federal Inland Revenue Service will pay the tax collected together with any interest and penalty into the Federation Account and provides the charging of 9% on calls and data usage.

Part of the bill reads: ”…there shall be imposed, charged payable and collected, a monthly Communication Service Tax to be levied on charges payable by a user of an electronic communication service other than private electronic communication services. The tax shall be levied on electronic communication services supplied by service providers. For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of electronic communication service. The tax shall be levied on such electronic communication services like voice calls, SMS, MMS, data usage-both from telecommunication service providers and internet service-as well as pay per view TV stations. The tax shall be paid together with the electronic communication service charge payable to the service provider by the consumer of the service.”

The fact is that even though VAT and Taxes are great contributors to nation building, this policy will only end up not being in favour of the common man out there. The various taxes generated from other sectors do not seem to have yielded any tangible effects. The case of Fuel Subsidy and the old toll gates and how the money realized from them was utilized readily comes to mind.

There should be other ways to generate funds without punishing the poor man on the street that uses calls and data to power his small and medium enterprise on a daily basis. People are hungry and the last thing they need are government policies that will rob them of their little incomes all in the name of VAT and Taxes. ICT is an emerging aspect of our economy that needs all the support in the whole world.

We cannot be talking to youths about embracing ICT and still go ahead to make it costly.

Network providers do not have much to lose. They have the option of adjusting their ‘metres’ from the back door. This policy will only end up being to the detriment of the ordinary man on the street. So, if it is in their interest as the government claims, then the policy needs to be reviewed, or else it would amount to a case of robbing the common man to enrich the leaders of this country.