Senate pushes for lower communication tax to replace 2.5% VAT hike

The Senate will push for a downward review of the Value Added Tax (VAT) recently increased from five per cent to 7.5 per cent as part of the Finance Bill recently approved by the National Assembly.

Senators had, shortly after the introduction of the Finance Bill, rejected the proposal for the increment in VAT and vowed to support the approval of the Communication Tax Bill,  sponsored by a former Senate Leader, Ali Ndume.

Ndume and his colleagues had argued that the increment in VAT would impose more hardship on the underprivileged Nigerians who were already undergoing serious difficult situations.

They noted that the CTB remained the best alternative to raise revenue for the government without subjecting the poor to further hardship and pains.

Ndume, in an interview with our correspondent on Saturday, confirmed the move and said his colleagues would assess the impact of the VAT increment on the lives of underprivileged Nigerians and take  definite steps to ameliorate it.

He said the lawmakers would push for the immediate approval of the Communication Tax Bill, which has passed first reading in the Senate, so as to ensure the downward review of VAT,  in the interest of the masses.

Ndume said, “The Finance Bill is not sacrosanct. I’m still of the opinion that the VAT should be reviewed downward while the communication tax bill should be introduced but we will wait and see the effect of the increase in VAT.

“If it affects the masses more, I’m sure the executive will also buy the idea of bringing in the Communication Tax Bill. If it (VAT) has adverse effects on the common people, the executive will do something about it because the law is not sacrosanct,  it is subject to a review.

“The Finance Bill is okay but our argument is against the increment in the VAT.  The government has to look for an alternative to see that those who have more should pay more tax,  it is not good to overburden the underprivileged with tax.

“We are not going to drop the bill. We will monitor the effect of the additional 2.5 per cent increment in the VAT before we proceed. It is possible for the executive to reduce the VAT percentage on goods that are essential to the underprivileged people.”

Also,  the Chairman, Senate Committee on Media and Public Affairs, Senator Godiya Akwashiki, told our correspondent on Saturday that the CTB, which had already passed first reading, would undergo normal legislative process.

He said, “A bill is the decision of all senators. During the second reading,  some senators would still speak for or against it.I cannot speak on a bill that has just passed first reading. I will speak on it when it has been passed into law.”

The communication bill, which is an Act to introduce tax on Communication Services and Cable television services scaled first reading at the Senate in November last year.

The introduction of the tax, it was learnt, was to replace the 2.5 per cent increase in VAT.

Ndume said the imposition of tax on communication service was a better way of distributing wealth in such a way that would not affect the ordinary people.

He explained that increasing VAT would have very devastating effects on the economy as it would definitely lead to a hike in the prices of goods and services and take them beyond the reach of the ordinary people.

The bill provides the charging of  nine per cent on calls and data usage and the pay-per- view cable subscribers.

The bill read in part, “There shall be imposed, charged payable and collected a monthly Communication Service Tax to be levied on charges payable by a user of an Electronic Communication Service other than private Electronic Communication Services.

“The tax shall be levied on Electronic Communication Services supplied by service providers.

“For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of ECS.

“The tax shall be levied on such ECS like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as pay-per-view TV stations.

“The tax shall be paid together with the Electronic Communication Service charge payable to the service provider by the consumer of the service.

“The tax is due and payable on any supply of Electronic Communication Service within the time period specified under sub-clause (5) of whether or not the person making the supply is permitted or authorized provide ECS.

The bill stipulates that the  Federal Inland Revenue Service established under section 1 of the Federal Inland Revenue Service (Establishment) Act, 2007 would responsible for collection and remittance of tax, any interest and penalties.

It added that the FIRS shall pay the tax collected together with any interest and penalty into the Federation Account.

The bill further stated that all service providers shall file a tax return to account for the tax.

The legislation further read, “The tax return shall be in a form prescribed by the FIRS and shall state the amount of tax payable for the period and any related matters that may be required.

“The return and the tax due to the accounting period to which the tax return relates shall be submitted and paid to the FIRS not later than the last working day of the month immediately after the month to which the tax return and payment relates.

“The FIRS may extend the period within which the tax return may be submitted and payment made on application in writing by a service provider, where good cause is shown by the applicant.

“The extension shall be communicated to the applicant in writing and shall state the circumstances under which the tax return shall be submitted for the particular period.

“A service provider who without justification fails to submit to the FIRS the tax return by the date is liable to a pecuniary penalty of N50,000.00 and a further penalty of N10,000.00 for each day the return is not submitted.” – Punch.

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