Telecoms reject Phone calls tax

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When last week I saw the headlines that the Governor of the Central Bank of Nigeria had the idea of introducing telephone calls tax on Nigerians, I did not take the news seriously because as they say, every man is entitled to his opinion.

Telecoms reject Phone calls tax
Phone calls could be taxed

Besides, the statement was made not as a CBN policy statement. It was just his remarks at at dinner organized by the Charters Institute of Bankers. He was trying to explain how it was possible to make money for the government in a depressed economy like ours.

Nigerians know the government is seriously looking for other sources of income to fund capital projects and also fund the country’s foreign exchange demand.

Since the price of crude oil crashed, our main cash source became  inadequate. The situation now calls for lots of creative ideas from the authorities to get more money. So this was the CBN Governor throwing out ideas on how to get money.

Telecoms reject Phone calls tax
Gowin Emefiele, CBN Governor

The CBN Governor’s idea was not that creative though. His proposal was simple. Tax phone calls after the first three minutes. Where he got it wrong was thinking only the upper middle class and the rich make more that three minutes phone calls.

That aside though, some analysts figured that if the proposal is implemented, the government would earn at least  N100 billion monthly. That is a tidy sum.

I discarded the idea immediately I read it as something the Governor had to say because he needed to show his dinner mates he had ideas on how to turn around the economy.

Telecoms reject Phone calls tax
GSM networks in Nigeria

But Nigerians have being reacting angrily to what I thought was an off the cuff remark. The gist of their anger was two fold

  1. A telephone tax would further compound the economic hardship being faced by Nigerians.
  2. The poor spent as much time on making calls as the rich.

Leading the opposition to the idea is the apex body of telecoms in Nigeria, Association of Telecommunication Companies of Nigeria (ATCON).

ATCON are aligned firmly behind ordinary Nigerians in condemning the idea by the CBN Governor.

The ATCON President, Mr Olusola Teniola, made it known to newsmen that the plan if implemented, would negatively impact on the cash the networks are making.

His logic was simple. Since more poor people make longer calls than the rich, imposing the tax would stop them from making long calls. The effect of this is, the telecoms would make less money and the Government won’t even see the expected revenue from the idea.

Hear what the ATCON President told Newsmen:

It does not make sense, not only technically but economically, to apply that kind of thinking as a tool or solution out of the present economic recession, it is not going to work.’

Telecoms reject Phone calls tax
Olusola Teniola, ATCON president

Okay, let’s take a deep breath and calm down for a second. From where I am sitting I don’t see how Nigerians would make less calls if a small surcharge is added to calls to increase government’s revenue.

In fact, why wait till the third minute. Tax the initiator of a call a a bit of money. Who would notice that?

Let’s assume the cost of a call now is 11kobo/sec. How would increasing the call rate for all calls by 1kobo drastically effect how much time we spent making calls?

I dare say many people won’t even notice that slight increase. Lets just see it as our 1kobo contribution to dragging the country out of this mess.

As for how much the government would make from that 1kobo increase, I don’t presume to know. All I know is, it is going to be a lot of money. Even more than the N100 billion per month some people projected as the amount to accrue to government in the original plan by the CBN Governor.

 

image credit: guardian.ng; premiumtimesng.com;

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