Proposed Communication Tax Denies Nigerians Internet Access

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Ernest Ndukwe

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The new information and communications technology being considered by legislators in Nigeria will deny more than 20 million Nigerians access to broadband connection

THE new Information and Communications Technology tax being considered by legislators in Nigeria is likely to prevent more people from being able to afford basic internet connection. According to the Alliance for Affordable Internet, A4AI, Nigeria Coalition, the proposed nine per cent tax to be levied on consumers of communications services will result in an additional 10 percent of the population equivalent to nearly 20 million Nigerians being unable to afford a basic broadband plan.

An analysis by the AAINC shows that the passage of such a tax will threaten Nigeria’s ability to achieve its goal of 30 percent broadband penetration by 2018 and also undermines the socio-economic progress spurred by increased connectivity in the country.

The Communication Service Tax Bill 2015, currently in front of the National Assembly, will require consumers of voice, data, Small Messaging Service, Multi Media Service 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 that consumers already pay when they purchase devices and communication services, the 12 percent custom import duties paid on ICT devices, and the 20 per cent tax levied on Subscriber Identification Module 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.

Meanwhile, an industry analyst has said that increasing access to 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 percent of average income in 2014), broadband penetration stands at just 12 percent.

“The reality is that 40 percent of Nigerians earn less than half of the average income; this means that a basic mobile broadband plan actually costs the majority of Nigerians anywhere between 7 and 18 per cent of their monthly income. The addition of this tax will increase the cost to connect across the board, with women and low-income populations likely to be the hardest hit,” the analyst said.

Commenting on the proposed law, Ernest Ndukwe, national coordinator, A4AI-Nigeria Coalition, 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.”

Ndukwe, a former executive vice chairman of the Nigerian Communications Commission, said, “Nigeria is far behind the 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 a 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 will enable it to achieve fiscal revenue targets without undermining broadband affordability and access.”

The A4AI, Nigeria, brings together prominent players from private and public sectors and civil society to provide a unified approach and coordinated focus in addressing the shared goal of open and affordable access to the Internet in the developing world. A4AI ranks as the world’s broadest technology sector coalition with the desire for everyone, everywhere, to be able to access the life-changing power of the Internet affordably.

Its goal is to achieve the United Nations Broadband Commission’s target of entry-level broadband priced at less than five per cent of monthly income, thereby enabling billions more people to come online.

—  May 30, 2016 @ 01:00 GMT

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