Nigeria government creates new Talk Tax
The Nigerian government has created a new tax on phone calls in the bid to fund free healthcare for Nigerian citizens—classified as a vulnerable group—who cannot afford healthcare.
This new law is captured in the new National Health Insurance Authority Bill 2021, signed by President Muhammadu Buhari last week.
The taxes to be collected will be put in what the law called a Vulnerable Group Fund.
It defines “vulnerable group” as “children under five, pregnant women, aged, physically and mentally challenged persons, and indigent people as may be defined from time to time”.
Section 26 sub-section 1c of the Act provides that the source of money for the Vulnerable Group Fund includes “telecommunications tax, not less than one kobo per second of GSM calls”.
Other sources of income for the Vulnerable Group Fund include the Basic Health Care Provision Fund, health insurance levies, grants, donations, gifts, and any other voluntary contributions. The law also requires that all persons resident in Nigeria are expected to obtain health insurance.
With average call rates of 11 kobo per second, this new act implies that there will be a tax of at least 9% per second on all phone calls made in Nigeria.
Nigerians made 150.83 billion minutes of calls in 2020 alone, according to a report by the Nigerian Communications Commission (NCC). This translates to 9.05 trillion seconds of calls, meaning the new tax will generate at least 9.05 trillion kobo, which converts to ₦90.49 billion ($18.09 million), annually.
It’s not clear when this new tax will take effect and exactly how much it will be. But it is likely that there will be an increase in call tariffs in Nigeria, as it’s unlikely that the telecom companies will absorb the cost.
Last month, telecom companies under the umbrella of the Association of Licensed Telecommunication Operators of Nigeria proposed a 40% increase in the cost of calls, SMS, and data as a result of the rising cost of operating in the country. This new tax creates a more compelling case for the telcos to hike their prices.
