Multiple Levies on Telecoms Operators……Killing The Goose

telecoms_mastWhen the telecommunications sector in Nigeria got fully deregulated in 2001, many were more fixated on the social benefits – all Nigerians are now at liberty to carry mobile phone(s). Not many is really bothered about the real economic contribution of the industry, and the need to not only nurture but support motions to ensure adequate pervasiveness of the service. Rather they see another quasi-oil setup to be tethered and milked dry. This is true of many local government, state government,some federal agencies, and even hosting communities. There’s surely a genuine need to campaign against this wicked milking and extortion.

For the record, the telecoms industry in Nigeria has been one of the major drivers of the economy for the past 10 years. The industry is currently contributing about 7% of the nation’s GDP, with a year-on-year growth of over 30% since 2001. No other sector of the economy aside Agriculture (which is heavily subsidized anyway) can boast of such contribution, not even Petroleum and Natural Gas. Is this alone not enough reason to protect the industry from those elements bent on turning it anorexic?

We have seen Delta State government demanding over N276m as Ecological tarriff, Anambra asking for N500,000 per cell site as Environmental Impact Assessment fees, Abia State demanding N19m as Infrastructural development levy, Oyo State asking for N400,000 per site as Environmental Development Levy, Abuja adamant on N257m annual charge for operations within the capital, Department of Petroleum Resources(DPR) must get storage licence fees. Even NCC is charging operating levy of 2.5% on operators’ gross revenue!

While government agencies are milking the operators of their earned revenue, hosting communities are also ironically turning the companies into their state governments:

“You are making humongous money here, as such you must tar our roads and build our bridges”.

“You are supposed to contribute to the community, so you should roof our children’s school”.

“If you cannot sink some boreholes here, or give us electricity, then come and pack your equipment”.

Let me be clear. It’s true companies are expected to extend to the communities some corporate social benefits, but this should not be deemed an obligation especially when the company is not degrading the environment. If degradation is involved, I will be the first to champion the cause of the affected for compensation. The government that collects taxes is there, it should be accountable and responsible with no abdication nor transfer of duties.

It should be noted that these telecoms operators pay the statutory company income tax, value added tax, and import duties on equipment from which all these arm of government normally share. Must they now pay again for governments’ horticultural tendencies?

It is more interesting when you realize that all matters relating to post, telegraph and telephones are on Item 46 of the Exclusive Legislative list of the 1999 Constitution. Consequently, any issue relating to the three should be outside the jurisdiction of any state or local government authority. That suggests that all the so called levies may actually be illegal.

All the same, it should be noted that the “flower monies” as such may not really affect the operators, but the Nigerian  economy. Companies, annually, traditionally project their earnings, expenditure and net profit; as such any extraneous item (especially unnecessary ones) distort the financial arrangement. Will they let it go like that? For your information, they usually get round this and your taxman and you (as per your service experience) will be the worse for it:

  1. Reduction in the effective tax: Since lots of money has been illegally extorted, and of course allowable for tax purpose, the real tax getting to the normal government’s coffer gets reduced. The real contribution of the industry to the economy is thus stymied and blurred by the agents of “milking”.
  2. Off Cash-Book Deals: In order to escape the real effect of the extortion and thus meeting their “strategic goal”, the companies may create another ‘evil’, and that’s to engage in deals where revenues are not captured in the books. This is much possible in the case of charging companies gross revenue. The uncaptured revenue (black money) is then deployed as they wish with no tax, and maybe without any effect on the economy ever.
  3. Capital Flight: This is very related to the black money earlier discussed. Uncaptured monies in the range of billions may be taken out of the economy to wherever, in order to continue enjoying the no-tax status. You can imagine the effect of that on the economy, when additional investments could have been established here at home, but because of road side flowers, the monies find their way into some other economy oiling  it further.
  4. Poor Quality of Service: With the price wars raging and coupled with the regulatory stances at some points, their is already a huge pressure on the revenue of the operators as the average revenue per user (ARPU) continue to dwindle. Additional expenses, illegal as they are, may put the quality control efforts of the operators into jeopardy. They require money to buy equipment and to pay staff who are to ensure all works well, yet some agencies continue dipping their hands into the operators’ purses. The resultant effect will be sub-optimal quality of service. It therefore means the agencies activities eventually affect each one of us. No wonder I was having difficulty reaching my friend’s mobile when he’s even right beside me.

The time has come for us to blow the trumpet of reason for the relevant authorities to start calling these state and local governments to order in their indiscriminate levies and eventual lock-ups. The levies are not adding value to the masses, aren’t they eventually looted? Telecoms is the one laying the national golden egg currently, they should not kill our goose.

Add your voice to the call for the halt of illegal levies on the telecoms operators by dropping your comments below.

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2 Responses to Multiple Levies on Telecoms Operators……Killing The Goose

  1. tokunbo says:

    In abuja we wake up to various parastatals /agencies, ministries dishing out levies that makes you think whether they conceived the idea/name in a ramshackle street side beer joint ,where the patrons were on a conquest to determine who will come up with the craziest name for their meal ticket(also known as levies)
    I was privy to a meeting when an agency mentioned they will start collecting pollution tax per generator. we had to ask whether all Nigerian households were included? These agency official who still didn’t get the question replied it was only for mast operators.asking him to define what they termed has pollution is a story for another day.
    It almost seems that internal generated revenue (IGR) is an euphemism for extortion.It is an irony that these agencies in this racket do not produce/create quality jobs compared to the companies they extort.Their laziness and ineptitude cant make them see that if they produce an enabling environment for companies to thrive ethically , the whole nation profits.

    The issue of multiple taxation,levies is not new, various groups in nigeria have been clamouring against it .I am yet to hear the FGN lay and take concrete steps against it.
    I will lay the blame on the government that refuses to enforce what the laws says and also not making themselves accountable and subject to the laws of the country.
    If accountability is our watchword, every person,companies or the State will declare what they have collected,spent or saved. when an erring/rogue agency collects an unauthorized levy,the agency knows that the said amount will be deducted from its federal allocation and the company involved should have its relevant taxes adjusted for the said amount.

    The era of not asking questions on how IGR was raised by agencies should stop,also the creation of agencies/parastatals with duplicating functions should looked into.

    If we continue on this path, the nation will continue to lose out( which seems to be what some highly placed individuals prefer) and the development of the nation will be severely affected

    • mckaff says:

      IGR drive with no mandate….it’s interesting that telecoms operators are always the first candidates when any ‘levy’ is to be pushed. The industry is the national cash cow. The belief is that if the SS states could tax the oil companies, the telecoms guys should feel the heat too. There’s no problem requesting for PPP stuffs, but hiding under the government power to extort…!

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