The Senate is set to reject the proposed 2.2% increase in the Value Added Tax (VAT) being planned by the Federal Government. Minister of Finance, Zainab Ahmad, had since given an indication of the increase from the current 5% to 7.5%.
In the alternative, the lawmakers are seeking a legislative action to impose a tax on Communication Services.
The Bill for an Act to establish the Communication Service Tax was formally introduced on the floor of the Senate on Wednesday by former Senate Leader, Ali Ndume.
Senator Ndume who spoke with newsmen after Senate plenary session described the VAT as skewed against ordinary Nigerians.
He said the Communication Service Tax was a way of distributing wealth in such a way that it would not affect the ordinary people.
He noted that the VAT increase would ultimately create grave discomfort for larger percentage of Nigerians as the prices of goods and services were bound to hit the roof.
The proposed Communication Service Tax Bill provides that the rate of the tax is 9% of the charge for the use of the communication service.
The Bill reads in part: “There shall be imposed, charged payable and collected a monthly Communication Service Tax to be levied on charges payable by a user of an Electronic Communication Service other than private Electronic Communication Services.”
The Bill further stated that “the tax shall be levied on Electronic Communication Services supplied by Service Providers.
“For the purpose of this clause, the supply of any form of recharges shall be considered as a charge for usage of Electronic Communication Service.”
The Bill provided that the tax shall be levied on such Electronic Communication Services like Voice Calls; SMS; MMS; Data usage both from Telecommunication Services Providers and Internet Service as well as Pay per View TV Stations.
If the bill is passed, “the tax shall be paid together with the Electronic Communication Service charge payable to the service provider by the consumer of the service.”