Subscribers have resisted the advice by the International Monetary Fund (IMF) asking the Nigerian government to introduce excise duties on telecommunications services and extend value-added tax (VAT) to fuel products, saying the sector is already overtaxed.

The IMF recommended in its updated Article IV consultation report on Nigeria. It said Nigeria would need additional tax policy reforms over the medium term to create enough fiscal space for development spending and social interventions, warning that the current pace of capital expenditure may not be sustainable without stronger revenue growth.

But speaking with The Guardian on the matter, yesterday, the President of the National Association of Telecom Subscribers of Nigeria (NATCOMs), Deolu Ogunbanjo, said the IMF lacked a proper understanding of what is currently going on in the sector, saying it (the sector) currently faces over 40 different types of taxes.

Ogunbanjo said the body had earlier rejected a planned five per cent excise duties on telecommunications services, stressing that the body even went to court to secure an injunction against it.

The IMF said robust implementation of Nigeria’s newly signed tax laws should gradually improve revenue collection, but this alone may not be sufficient to meet the country’s fiscal needs.

The IMF, however, stressed that the timing of such reforms must take into account rising poverty levels and food insecurity across the country.

It advised Nigerian authorities to ensure that an effective and well-funded cash transfer system is in place before rolling out additional tax measures that could worsen cost-of-living pressures.

The international body also urged Nigeria to deepen the use of digital technology in revenue administration to reduce leakages and curb corruption vulnerabilities.

According to the report, leveraging digitalisation to track, verify and collect government revenues could significantly improve tax efficiency.

The IMF noted that it is continuing to support Nigerian authorities on tax administration reforms through technical assistance, including the deployment of a resident advisor on tax administration and customs support from its regional technical assistance centre.

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The Federal Government had announced it had scrapped the five per cent excise duty earlier imposed on telecommunications services to ease cost pressures for millions of Nigerian subscribers.

The excise tax on telecommunications was introduced in 2022 under the regime of former President Muhammadu Buhari to raise more non-oil revenue for the government. It covered both voice and data services, with operators directed to remit on or before the 21st of every month.

Then, officials justified the levy by pointing to Nigeria’s widening revenue shortfall and the need to expand the tax net beyond oil earnings.

The Association of Licensed Telecom Operators of Nigeria (ALTON), led by Gbenga Adebayo, had opposed the five per cent excise tax.

ALTON explained that companies were already struggling with more than 39 different taxes, a 7.5 per cent VAT, and a mandatory two per cent contribution of yearly revenue to the Nigerian Communications Commission, known as the Annual Operating Levy (AOL).

The telecom body, like NATCOMs, said that the burden of more taxes on the sector will be passed down to subscribers, which could further widen digital growth gap in the country by leaving telecom services in the hands of only the rich.

Meanwhile, Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has acknowledged the positive assessment of Nigeria’s economic reforms by the IMF Article IV Consultation Report.

He admitted the economy was gradually moving from instability to greater predictability, an important foundation for investment, productivity and sustainable growth.

Sharing the IMF’s concern about the persistence of poverty and food insecurity despite the progress made on macroeconomic stabilization, he said economic reforms are judged not only by their impact on macroeconomic indicators but by their ability to improve citizens’ welfare.

He added that the next phase of economic management must focus on converting macroeconomic gains into welfare gains as the challenge before policymakers is no longer economic stabilisation but one of inclusive prosperity.