- But stakeholders must ensure an end to the multiple taxation of telcos
The alleged threat by telecommunications companies working in Nigeria to agitate for an upward review of tariffs in selected states, due to the avalanche of statutory and non-statutory taxes imposed by some state governments, must be resolved without delay.
There is no doubt that telcos are struggling under the burden of a tortuous mix of levies, taxes and charges that significantly inhibit their ability to function effectively. President of the Association of Telecommunications Companies of Nigeria (ATCON), Mr. Olusola Teniola, estimated in October 2018 that mobile telephony operators pay on the aggregate some 23 different taxes to various government agencies at the federal, state and local government levels.
State governments have been particularly active in insisting on the payment of allegedly non-statutory levies and charges by the telcos, and have resorted to shutting down base transceiver stations and denying them Right of Way for their infrastructure. Even where the taxes are legal, they are often poorly assessed and the amounts demanded are sometimes well in excess of what is prescribed. To worsen matters, these charges and taxes are often collected using blatantly extra-legal methods.
For a country with notoriously difficult infrastructure challenges, the imposition of multiple taxes upon businesses that have been forced to build their own infrastructure is patently unfair. There is no reason why a sector which contributes an estimated N1.4 trillion to the national economy every quarter should be subject to such relentless taxation.
However, this admittedly lamentable situation does not give the telcos the right to threaten its long-suffering subscribers with tariff hikes. Their customers are not responsible for multiple taxes and charges, nor are they the ones who resort to crudely thuggish methods of collecting them. Indeed, such tariff increases only worsen the predicament of citizens who have had to contend with consistently below-average services characterized by dropped calls, poor connectivity, price gouging and indifferent customer service.
It is time for the Nigerian Communications Commission (NCC), the industry’s regulatory agency, to decisively step into the matter. Indeed, its apparent silence in the midst of the telcos’ complaints is mystifying, and only gives substance to widespread suspicions that it has abandoned its primary role as regulator. In April last year, the NCC appealed for more time to look into the multiple-taxation complaints of telcos. After nearly twelve months, it must have come up with effective strategies to tackle the problem.
The Commission should collate all complaints made by telcos and work with other stakeholders, especially the Ministry of Communications and the Federal Inland Revenue Service (FIRS), to streamline the taxes and charges payable by telcos. In attaining this end, it must ensure that its traditional strategy of convening stakeholder forums does not end up in the usual talkshop.
The state governments which see telcos as cows to be milked to death must be formally warned to adhere to established revenue-collection regulations. Where they prove to be recalcitrant, the telcos must seek redress in court. Indeed, this may be the ultimate solution to the problem, as the state governments concerned are unlikely to be dissuaded from their indulgence in virtual extortion unless they face judicial sanction.
The Federal Government must also be more proactive in addressing the infrastructural challenges which compel telcos to expend so much working capital in the first place. It is tragic that, nearly two decades after the global system for mobile telecommunication (GSM) took off in Nigeria, telcos are still forced to build base stations with double-redundancy power generation, in addition to developing the critical national infrastructure that is taken for granted elsewhere.
All stakeholders in the telecommunications industry must ensure that they contribute meaningfully to a viable solution. Increasing tariffs, even if only selectively, cannot solve the problem. It will inevitably create customer resistance which will in turn lower profits, worsen the operating environment for telcos, and put them in an even worse position than the one they are currently bemoaning.