Telecoms: Multiple taxation, regulations bane of sustainable development –NCC

*The Nigerian Communications Commission engages industry stakeholders and government officials on how taxation, though an instrument for socio-economic development, is fast constituting a stumbling block to sustainability because of multiple taxation and regulations in the telecoms sector of the economy

Gbenga Kayode | ConsumerConnect

Despite the huge prospect of recording marked development in varying sectors, the Nigerian Communications Commission (NCC) has said the presence of multiple taxation has and continues to remain a bane on sustainable economic development in the West African country.

ConsumerConnect reports Mr. Adeleke Adewolu, Executive Commissioner, Stakeholder Management (ECSM) at NCC, stated this in his keynote speech delivered at a recent regional stakeholders’  workshop on multiple taxation and regulations in Ibadan, Oyo State capital.

The telecoms regulatory Commission noted it hosted the forum for industry stakeholders to specifically engage with the senior government functionaries from all the states in the South-West  geopolitical zone.

The NCC said the objective of the workshop was to build better understanding on the damaging effects of multiple taxations and regulations being imposed on the telecoms companies by especially the states and their agencies and agents.

Adewolu in his address to the participants stressed  in spite of the country’s huge population and adjudged position as the strongest economy on the African continent, Nigeria has not been able to attain the expected “strong economic growth” to generate substantial prospects for growth and spillovers for the whole West African sub-region.

The ECSM of the Commission also stated: “Despite the prospect of accelerated economic growth, the presence of multiple taxation, which the World Bank has termed ‘nuisance taxes’  has and continues to prove to be a bane on economic development in the country.”

He, however, acknowledged the fact that taxation is a veritable tool for economic development in any progressive economy.

“The curious question, which this workshop will attempt to answer, is how a fiscal tool for economic development like taxation can become inimical to economic development,” Adewolu said.

According to him, it is imperative to correct some misconception about taxation, particularly the misguided notion of taxation as a penal tool on thriving business enterprise.

He noted: “Taxation is the backbone for public finance. It provides guaranteed and sustainable sources of funding for social programs and public investments.

“It also serves as a tool curated by the government to effectively and efficiently distribute our commonwealth.”

The ECSM further averred “it is thus evident that taxation is critical for making growth sustainable and equitable.”

He as well stated that taxation, by design, is an instrument for economic development, and it is important to acknowledge and support the initiative of all tiers of Government in using taxation as an instrument for socio-economic development.

Adewolu, however, disclosed that supporting the tax initiatives by the various tiers of government includes indicating where “a category of taxes has become cancerous to economic development.”

The Commission further explained this type of taxes typically manifests in the form of multiple taxation, and said “by design, they reverse growth, stifle innovation and discourage investment.

“In parabolic terms, they are the scarecrows mounted by government to disincentivise development,” NCC declared.

Adverse effects of multiple taxation on telecoms sector, by NCC

Referencing the National Tax Policy 2017, the Commission said the policy described Multiple Taxation as the imposition of the same or similar taxes on the same income base, transaction or person by one or more levels of Government, in one or more jurisdictions.

Adewolu contended while a level of multiplicity is expected in Federal system of governance, the levying of a particular tax on the same person/entity, in respect of the same liability by more than one State or Local Government Council should be avoided.

He stated: “The paradox of multiple taxation is that it does not lead to an increment in government revenue, rather the crippling effect of these taxes, is that it makes otherwise profitable businesses, unprofitable. “It negatively, impacts the ease of doing business, shrinks the tax base, incentivises tax evasion and complicate tax compliance.”

Also quoting the World Bank, the ECSM noted that taxing a specific tax base would lead to increasing revenues up to a specific point, after which the overall tax revenue will decline because companies go out of business, or evasion increases significantly.

He stressed aside from these challenges, the economic burden of multiple taxation is further exacerbated by the administrative burden of complying with these taxes.

“It further makes Nigeria an undesirable ground for breeding healthy business and competitive practices,” Adewolu said.

What provisions of National Tax Policy 2017 say

The Commission’s ECSM noted that the National Tax Policy 2017 emphasises the need to eradicate multiple taxation at all tiers of government in Nigeria.

He said the policy states that taxes similar to those being collected by a level of Government should not be introduced by the same or another level of Government.

Adewolu, therefore, urged the Federal Government, States, and Local  Government Areas (LGAs) to ensure collaboration in harmonising and eliminating multiple taxation in the Nigerian economy.

The Executive Commissioner reminded the stakeholders at the forum that President Bola Ahmed Tinubu has indicated his administration’s  commitment to addressing “the vexed issue of multiple taxation.”

He said the President recently, signed a number of Executive Orders to curb arbitrary taxes in the country.

Besides, the NCC stated that Tinubu also inaugurated the Committee on Fiscal Policy, Tax Reforms aimed at unifying taxes and further engage various stakeholders in order to identify their pain points and critical concerns bothering tax and fiscal policies.

“This would also facilitate a conducive environment for conducive for local and foreign investment into the country,” he noted.

According to Adewolu, the workshop was an avenue to rethink the country’s approach to taxation by adhering to its founding principles in respect to the overarching principles of taxation in a economy.

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