Across the world, particularly in the developing economies that are leveraging on technology to grow their economy, the rave is the abolition of telecoms excise duties.
Still defending the case for the removal of the proposed five percent telecoms excise duty, the Minister of Communication and Digital Economy, Professor Isa Pantami, said the Democratic Republic of Congo abolished excise duty of 10% on mobile services adding that it led to an increase of mobile connections by 3.2 million and $230 million in additional investments.
He said also that in Tunisia, the reduction of 5% duty increases market penetration by 420,000 connections, 288,000 3G/4G connections, attract $100m CAPEX for network expansion, attract an additional $74m investment in other sectors of the economy, increase GDP by $314 million, add 3,700 jobs to the economy and even enhance other taxes to the tune of $22 million.
According to him, reduction of the duty in Jordan from 24% to 12% is expected to increase market penetration by 570,000 connections, 3G/4G connections by 390,000, attract $70m CAPEX for network investment, add $140 million investment in other sectors of the economy, increase GDP by $660 million, add 5,000 jobs to the economy and provide additional tax revenues to the tune of $100 million.
And in Saudi Arabia, the Pantami said that the removal of the duties on mobile services is expected to add 1.7 million connections, 1.3m 3G/4G connections, increased CAPEX for network investment by $312 million, up to $1.5b in additional investments to other sectors of the economy, an additional $4.7 billion to the GDP, 29,000 new jobs and additional tax revenues of $209 million.
The Minister stated that digital services are not a luxury but a necessity and should be encouraged, rather than discouraged.
“A collection of excise duty from the digital economy sector would impact the sector and Nigerians negatively. The telecoms sector already contributes a lot to the Nigerian economy and it is better for government to consider taxing other sectors of the economy that are not contributing to national development, than increasing taxes on a sector that is already supporting the economy in a great way”, he explained.
The Minister screamed that the telecommunications industry in Nigeria is already inundated with multiple taxes at the federal and state level and it would be unfair and counter-productive to increase these taxes.
“A few weeks ago, there were 39 such taxes and this number has risen to 41 taxes today”, he stated.
Pantami listed the areas that the excise duty would affect to include:
a) May reduce affordability of handsets; and
b) Reduce penetration and economic spillovers
ii. Usage of digital services:
a) May reduce affordability of usage; and
b) Limit use of beneficial services, especially for those at the bottom of the economic pyramid.
a) May reduce affordability of phone ownership, and thereby reduce penetration.
iv. New services e.g mobile money:
a) May reduce take up of innovative services, reduce positive spillovers.