The Nigerian Federal Government has rescinded the 5% excise duty imposed on telecommunications services, a move aimed at alleviating the financial strain on citizens and fostering the growth of the digital economy. This decision, announced by the National Orientation Agency via its official X platform, follows President Bola Tinubu’s directive during deliberations on the recently enacted Finance Act. The tax, which affected both voice calls and data subscriptions, was initially introduced under the previous administration of President Muhammadu Buhari as a means to bolster revenue generation in the face of declining oil earnings. The removal of the levy is expected to provide significant relief to over 171 million active telecom users in Nigeria, many of whom were already grappling with a 50% tariff hike implemented earlier in the year. This intervention signals a shift in government policy towards supporting affordability and accessibility within the telecommunications sector.
The 5% excise duty, first implemented in 2022, was met with widespread criticism from various stakeholders, including telecom operators and consumer advocacy groups. These groups argued that the additional tax burden would disproportionately affect Nigerian citizens already struggling with rising living costs. The government at the time defended the levy, citing its alignment with international taxation practices and its necessity for increasing revenue amidst dwindling oil resources. However, critics, particularly the Association of Licensed Telecom Operators of Nigeria (ALTON), countered that Nigeria already bore one of the highest tax burdens on the telecommunications sector in the sub-Saharan African region, making the excise duty further detrimental to the industry and its consumers.
The reversal of this tax policy reflects a recognition of the concerns raised by industry players and consumer groups, acknowledging the potential negative impact on affordability and digital inclusion. The President’s intervention underscores the government’s commitment to creating a more conducive environment for the growth of the digital economy by ensuring access to affordable communication services. This move is anticipated to stimulate increased usage of telecommunication services, facilitating greater participation in online activities, e-commerce, and digital innovation across the country. By removing this financial barrier, the government aims to foster a more inclusive digital landscape, enabling wider access to information, education, and economic opportunities.
The removal of the excise duty marks a significant departure from the previous administration’s approach to revenue generation, indicating a more nuanced understanding of the telecommunications sector’s role in economic development. Rather than viewing the sector solely as a source of tax revenue, the current government appears to recognize its potential as a driver of economic growth and social progress. By reducing the cost of communication, this policy change aims to empower citizens, businesses, and various sectors to leverage the power of digital technologies for productivity, innovation, and societal advancement.
The decision to remove the tax also highlights the importance of dialogue and engagement between the government, industry stakeholders, and consumer groups. The widespread criticism of the excise duty and the subsequent policy reversal demonstrate the power of collective advocacy in influencing government decisions. This instance serves as a testament to the importance of transparent communication and collaboration between various actors in shaping policies that serve the best interests of the public.
This policy change is likely to have positive ripple effects throughout the Nigerian economy. Increased affordability of telecommunication services is expected to boost digital literacy, stimulate innovation, and enhance access to various online services, including education, healthcare, and financial services. The removal of the excise duty signifies a positive step towards creating a more digitally inclusive society and fostering sustainable economic growth. Furthermore, it reinforces the government’s commitment to prioritizing the needs of its citizens and creating an enabling environment for the flourishing of the digital economy.
