The A4AI-Nigeria Coalition is calling on the national government to reject a new ICT tax that is currently under consideration by the country’s National Assembly. The proposed Communication Service Tax (CST) would require consumers of voice, data, SMS, MMS and pay TV services to pay a 9% tax on the fees paid for the use of these services. If passed, the CST would make a basic Internet connection unaffordable for an additional 20 million Nigerians — a fact that is likely to undermine Nigeria’s ability to achieve its goal of 30% broadband penetration by 2018.

The 9% CST levied on consumers of communication services would be collected on top of the 5% Value Added Tax (VAT) that consumers already pay when they purchase devices and communication services, the 12% custom import duties paid on ICT devices, and the 20% tax levied on SIM cards. Mobile operators, who would be responsible for collecting consumer payments and reporting on payment compliance to the government, would likely see their operational costs increase; in turn, consumers would likely be hit with even higher service fees.

Nigeria has been lauded for placing ICT and increased access to and use of the Internet at the centre of the country’s development agenda. However, as the A4AI-Nigeria Coalition has shown, a tax like the CST would limit broadband access and, in doing so, would threaten the development and socio-economic growth goals the country is looking to achieve. Though Nigeria can currently claim to have some of Africa’s most affordable Internet prices (500MB priced at 5.4% of average income in 2014), broadband penetration today is just 12%. The reality is that 40% of Nigerians earn less than half of the average income, meaning that a basic mobile broadband plan actually costs most Nigerians anywhere between 7-18% of their monthly income. The addition of the CST would increase the cost to connect across the board, with women and low-income populations likely to be the hardest hit.

Commenting on the proposed law, Dr Ernest Ndukwe, National Coordinator for the A4AI-Nigeria Coalition, said:

“Balanced fiscal policy must consider affordability of broadband and ICT, and should not put into place additional barriers that would make Internet access unaffordable for hundreds of millions of Nigerians. Nigeria is far behind the more developed countries of the world when it comes to broadband use, and the introduction of the CST will only widen this gap. The National Assembly must reconsider the passage of the CST and its impact on the development of broadband in Nigeria.  After such a review, if the introduction of a CST is deemed an absolute necessity, it must consider a lower tax rate than 9%, one that would enable it to achieve fiscal revenue targets without undermining broadband affordability and access.”

Read the A4AI-Nigeria Coalition’s press release and full analysis of the potential impacts of the CST here.

Photo: International Institute of Tropical Agriculture (Flickr, CC BY-NC 2.0)