Tuesday, May 17, 2016

9% CST: ’20m Nigerians May Lose Internet Access’

Nigeria's Communication Minister, Adebayo Shittu

A proposed nine per cent ICT tax being considered by the National Assembly would prevent over 20 million Nigerians from being able to afford a basic broadband connection, according to the Alliance for Affordable Internet (A4AI)-Nigeria Coalition, Leadership.ng reports

Analysis by the A4AI shows that the proposed tax to be levied on consumers of communications services would result in an additional 10 per cent of the population – equivalent to nearly 20 million Nigerians – being unable to afford a basic broadband plan and threaten the 30 per cent broadband penetration by 2018.
According to A4AI, the tax would also undermine the socio-economic progress spurred by increased connectivity. The Communication Service Tax (CST) Bill 2015, currently before the National Assembly, would require consumers of voice, data, SMS, MMS and pay TV services to pay a nine per cent tax on the fees paid for the use of these services.

This tax would be collected on top of the five per cent Value Added Tax (VAT) that consumers already pay when they purchase devices and communication services, the 12 per cent customs import duties paid on ICT devices, and the 20 per cent tax levied on SIM cards. Mobile operators and service providers will be responsible for collecting consumer payments and must fulfil additional reporting obligations that are likely to increase operational costs and therefore service fees for consumers.

The national coordinator for the A4AI-Nigeria Coalition, Dr Ernest Ndukwe, speaking on the proposed law, said, “Balanced fiscal policy must consider affordability of broadband and ICT, and should not put into place additional barriers that would make internet access unaffordable for hundreds of millions of Nigerians.
“Nigeria is far behind more developed countries of the world when it comes to broadband use, and the introduction of the CST will only widen this gap. The National Assembly must reconsider the passage of the CST and its impact on the development of broadband in Nigeria.

“After such review, if the introduction of a CST is deemed an absolute necessity, it must consider a lower tax rate than nine per cent, one that would enable it to achieve fiscal revenue targets without undermining broadband affordability and access,” Ndukwe said.

Increasing access to and use of the internet and communication technologies is central to Nigeria’s development agenda. Though Nigeria can currently claim to have some of Africa’s most affordable internet prices (500MB priced at 5.4 per cent of average income in 2014), broadband penetration stands at just 12 per cent. The reality is that 40 per cent of Nigerians earn less than half of the average income.

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