Why Consumers Telecom Tax May Increase To 12.5 Percent by 2023

By Tolulope Oke

The Federal Government has announced that it will commence enforcement of its proposed excise tax on telecom services and beverages in 2023.

The Budget Office of the Federation, which is under the Ministry of Finance, Budget and National Planning, revealed its plan in its ‘2023 – 2025 Medium Term Expenditure Framework and Fiscal Strategy Paper,’ which was released on Friday.

The ministry claims that this was done in an effort to increase its non-oil revenue sources. The minister added that the introduction of the telecoms service tax was projected to result in an exponential increase in excise duty collections.

The office listed the full implementation of excise duty on telecom services, alcoholic, sugar-sweetened beverages, cigarettes, and tobacco items as one of the techniques that will be used to boost Customs’ revenue collections for the period of 2023–2025.

As a result of the telecom service tax and SSBs, excise income is anticipated to increase tremendously.

The budget office described the situation facing the government, stating that “Revenue generation remains the major fiscal problem of the Federal Government.

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“The systemic resource mobilisation problem has been compounded by recent economic recessions. Recognising that domestic revenue mobilization is important for sustainable development, the Federal Government has instituted the Strategic Revenue Growth Initiatives to improve government revenue and entrench fiscal prudence, with emphasis on achieving value for money.

“These measures include improving the tax administration framework, including tax filing and payment, as well as the introduction of new and/or further increases in existing pro-health taxes like excise on sugar-sweetened beverages, tobacco, and alcohol. Mixed reactions have greeted the implementation of these measures.”

The chairman of the Association of Licensed Telecom Owners of Nigeria, Gbenga Adebayo, had stated in response to the increased tax that telecom consumers will be responsible for the additional 5% tax, increasing the total tax paid by consumers to 12.5%.