What is the new tax on phone calls all about?

The federal government has introduced a new tax on phone calls to fund the provision of healthcare to vulnerable Nigerians who cannot afford the cost of medical care.

President Muhammadu Buhari said the National Health Insurance Authority Bill 2022 will ensure coverage for 83 million poor Nigerians who cannot afford to pay premiums.

But, telecommunication subscribers are kicking against the new directive to impose a tax on telephone calls in the nation to fund free healthcare for the vulnerable.

Telecom subscribers under the National Association of Telecoms Subscribers, have said they will reject this new move by the government.

The President of the association, Adeolu Ogunbanjo, said, “It is quite unfortunate that the government is viewing telecoms as a cash cow. We are saying. There is a lot of corruption in the system, and rather than curb that they want to focus on the telecoms sector.

“What do they mean by vulnerable? Vulnerable people in the nation are probably about 80 per cent of the population, we are all vulnerable. What has happened to the health budget? Why should it touch telecoms again? The government should look elsewhere for money. This new action is only likely to impoverish more Nigerians and they are masquerading as helping the vulnerable. This is not right.”

new tax on phone calls

According to the Nigerian Communications Commission (NCC), Nigerians made 150.83 billion minutes of calls in 2020. This translates to 9.05 trillion seconds of calls, meaning the new tax will generate 9.05 trillion kobo, which converts to ₦90.49 billion, yearly.

This new tax is coming despite moves by telecom companies to increase the price of calls, SMS, and data by 40 per cent due to increasing operational costs.

According to the Health Insurance Act, the Vulnerable Group Fund is money budgeted to pay for healthcare services for vulnerable Nigerians who cannot pay for health insurance in a bid to subsidise the cost of provision of health care services to vulnerable people in the country.

It added that the Vulnerable Group Fund will subsidise the provision of healthcare to children under five, pregnant women, the aged, physically and mentally challenged, and the indigent as may be defined from time to time.

The Act includes a provision under Section 26 subsection 1c which states that one of the sources of money for the Vulnerable Group Fund shall include a telecommunications tax, not less than one kobo per second of GSM calls.

Other sources of funding outlined in the Act includes a basic healthcare provision fund to the authority; health insurance levy; telecommunications tax, not less than one kobo per second of GSM calls; money that may be allocated to the Vulnerable Group Fund by the government; and grants, donations, gifts, and any other voluntary contributions made to the Vulnerable Group Fund.

According to the new Act, every resident in Nigeria is expected to obtain health insurance.

This is coming a few weeks after the FG also approved the collection of five per cent excise duty on telephone recharge cards and vouchers. The five per cent charge is part of new items on the list of goods liable for excise duty on the Finance Act in the country.

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