Erstwhile Senate Majority Leader, Senator Ali Ndume, in this interview with select journalists, reels out arguments in favour of the Communications Service Tax bill presently before the Senate, a piece of legislation sponsored by himself. EZREL TABIOWO was there. The parley held before his removal from office. Excerpts
What is the intent behind the introduction of the Communications Service Tax bill presently before the Senate?
The communications service tax is supposed to be a way of generating revenue for the government. Initially there were proponents for increase because it’s is generally agreed that the VAT rate in Nigeria is one of the lowest in Africa. And so the advocates for VAT tax increase are insisting for increment. But I feel if you increase Value Added Tax (VAT), that is going to affect the common man, the poorest of the poor and everybody. On the other hand, if you are concentrating on segregated taxes, then you target only some individuals, and that’s why I say anybody holding a phone can afford to pay tax on a phone. But not every Nigerian can afford to pay value added tax because it affects them. So, instead of increasing the value added tax to meet with what obtains internationally, I’m proposing instead that government should tax those people that can pay. What is the Tax? The communications service tax is one that is paid worldwide.
I made my research and discovered that over 180 countries are paying the communications service tax, so it’s not a new things. In Ghana which is close by, they pay tax on communication service which. Is being implemented. But ab initio, the communication service providers think that introducing such a tax will encroach into their profitability or market. They are the ones that are instigating the outcry. Infact, the common Nigerian has not complained about the rate at which they are being charged by these service providers not to talk about tax. The Nigerian telephone user is more concerned about drop calls, about incessant messages that they received unsolicited; they are not talking about rate.
Are you not worried that investors may consider pulling out upon introduction of the communications service tax by government?
Cuts in…Pull out and go where? There’s no viable business environment than the Nigerian one. As I told you, over 180 countries are implementing the communication service tax, and I dare anyone to go make findings.
Considering the timing of the bill, do you not think that it may put additional pressure on Nigerians especially against the backdrop of Nigeria’s recessed economy?
If that be the case, let me address the situation with this scenario. Is it better for the country to raise money through the communications service tax as way of funding it’s appropriation act (budget) or through external borrowing so that our children and grand children will pay?
That is why I’m saying it is now that Nigerians should be praying for the introduction of that tax so that we can generate income needed to fund the budget and provide other services. You see, this issue is not personal. I’m a Nigerian and I’m entitled to my own view just as everyone else. And in most cases, my own take on issues is that I’m a realist. The argument right now is that Nigeria has to look somewhere. Our oil revenue has depleted to the point that it is only about thirty percent of the national budget that is being funded by oil revenue.
Besides taxes collected by the Federal Inland Revenue and other revenue generating agencies, the budget is mostly funded by domestic and external borrowing. And this international borrowing we are talking about, last time the country was like this before we got the debt relief from Paris Club when we were made to pay so much to service out debt. Is it better to pile external debt so that we can fund critical sectors of our economy, then continue servicing the debt, or is it better to generate money internally by tightening your seat belt in other to take care of ourselves? That is my argument. It is not like we are saying Nigerians should be made to pay tax so that someone will collect it, No.
If the argument for tax collection appeals to you, what is the Senate doing to ensure introduction of property tax?
This is another area which I’m in agreement with, because you see people building big houses and they don’t want to pay tax on them. I support that in whole. Property tax is one of the areas which I believe house owners ought to pay. Not only that, I support that people should pay ground rate, because you’ll see some people owning thirty to forty houses in Abuja and they don’t pay taxes on these properties. And then they charge exorbitant rates on rent of their houses; some charge as much as N2 million to N3 million for two bedroom houses and they don’t pay tax on that.
So, I’m in support of that, but let me tell you why I’m more in support of communications tax, don’t get me wrong. Even if you introduce the property tax, you can only generate a fraction of what can to be realised from communications service tax because I know for example, in an area like Maiduguri, I think the turnover for a service provider is more than N1 billion in a month. So, let’s suppose we are charging one percent of that amount, that is big money government would be realising from just one state alone. Besides, the tax is one which will not be felt by Nigerians because for example, if a user spend N500 on recharging his/her phone, and N5.00 only goes to the government, what is wrong with that? That is my position, so it is not like I’m promoting this bill for any reason but because it is something I believe in.
Nigerians have complained about unjustified charges by deposit money banks, would the introduction of communications service tax not pose similar problems?
Cuts in…That even helps to stress the point I’ve been struggling to make. Is it not an irony that Nigerians are paying so over ten times more to the banks and they’re not complaining, but if you’re to pay to the government, you’ll complain. It is government that provides security, it is also government that provides infrastructures such as roads and all. These banks don’t even provide any service besides just keeping your money. And to make matters worse, we cannot legislate to effectively control these commercial services. But on the communications service tax, there’s no fear of such unreasonable deductions being made because there’s the customer protection council, consumer service, because taxes to be deducted would be publicly made known so as to protect the rights of the Nigerian consumer.
And let’s be honest with ourselves as Nigerians, in view of dwindling oil resources, with the need to diversify resources to fund government projects, don’t you think it is good to look at other areas to generate revenue? The answer here is yes, isn’t it? If you’re looking at that, are you going to at areas whereby the impact would not be felt? The immediate tax area which everybody is looking at for Nigeria is Value Added Tax, our current VAT is 5 percent, and it is one of the lowest in Africa. The data is there. But considering the condition of all Nigerians, if you raise VAT to 10 percent; I am saying no, don’t add VAT to 10 percent, charge 5 percent communication tax, and you’ll get more than 5 percent VAT your are looking for, instead of transferring that burden to the poorest of the poor, why don’t you charge those that can pay? That’s my argument.
Are you concerned about a backlash over this bill from Nigerians if passed and implemented?
No, as for me, I’m hard on that. I’ve come a long way. The worst that can happen to somebody is to be falsely accused of being a sponsor of Boko Haram, and I’ve survived it because of my truth. People are not honest, and that is what is killing this country. Which one is better as a Nigeria? Is it to increase VAT by additional 5 percent of to introduce communication tax that will charge 5 percent? Let’s be honest. Do you now increase VAT, so that even Maggi, salt or any other thing that is bought in the village would be affected by increased price? Or is it better to introduce tax which only those who can afford a mobile phone would pay? To me, the latter is negligible and meant for only those capable of paying.
The worst that can happen to somebody is to be falsely accused of being a sponsor of Boko Haram, and I’ve survived it because of my truth. People are not honest, and that is what is killing this country.
