The Nigerian tax system can create social problems for the government – Taiwo Oyedele

Mr. Taiwo Oyedele, Fiscal Policy Partner and Head of Tax for Africa at PwC, warned that the continued introduction of new taxes without considering the poor could create a social problem for the Nigerian government. Speaking against the backdrop of the recently announced 5% excise duty on telecommunications services, Oyedele said the Nigerian tax system lacks intentionality as it creates no room for the protection of the poor and vulnerable.

According to him, an additional 5% tax on telecommunications services will bring the total tax on data and voice consumption to 12.5%, when VAT is added. This, he said, will add an additional burden to poor Nigerians who use telecommunications services, which have become basic necessities for all.

Emphasizing the importance of call and data services for every Nigerian, Oyedele noted that if Maslow’s hierarchy of needs theory were to be developed today, telecom airtime and data could have been properly categorized with food and shelter as physiological needs, hence the need to ensure that the government does not overtax basic needs.

What Oyedele says

  • Speaking on the 5% excise duty on telecommunications services on a TV show monitored by Nairametrics, Oyedele said: “When we impose a new tax without taking into account the poorest who are just trying to survive, we create problems. If you are intentional as a government, what you would have done is start this tax by looking at middle class and maybe even upper class people, who normally will post-pay.
  • “Or alternatively you can create a threshold and say if your telecom service usage is 10,000. I’m just saying that number for the sake of this explanation, if your usage is 10,000 or less in a month, you don’t pay not this tax. Once you spend over 10,000 on the extra amount you spend, then you pay. The fact is that none of the poorest people in Nigeria are likely to spend 10,000 naira on telecommunications while many of them only earn 30,000 for an entire month to take care of the whole family.
  • “So I didn’t see this intentionality in our taxes and that’s a shame. If we continue in this pattern of simply introducing taxes without taking into account the social aspects; that we protect the poor, we are going to create a social problem very quickly, which can bring down the government, as we have seen in places like Sri Lanka, and I hope that does not happen because it could be too late at this point to make the corrections we should have done before,” he said.

Nigeria’s finance minister announced last week that telecom subscribers would soon pay a 5% tax on calls, text messages and data services.

In a development that showed the government contradicting itself, the Minister of Communication and Digital Economy, Professor Isa Pantami, on Monday called the tax unfair, saying he had not been consulted before his taxation. He pledged to explore all legitimate means to ensure the tax is stopped.

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