The CBN Governor Godwin Emefiele is back again in the news (Not like he ever left). The CBN Governor was a keynote speaker at the annual Bankers Committee Dinner and delivered a speech about alternative source of revenue for the government.
In providing an alternative to source of revenue for the government, the CBN Governor suggested that the government impose a telecoms tax for phone call conversations above 3 minutes. He also suggested that we introduce a tax on properties. Here is CBN Governor Emefiele in his own words;
“There are several ways we can raise additional revenue to finance the increased expenditure that is needed to engender fast and sustainable growth in the economy,” Emefiele said.
“I think we can consider introducing a negligible telecom surcharge to be entirely borne by the initiator of a call. In order to protect the poor and vulnerable amongst us, we could structure it to only take effect after the third minute of talk.
“Some analyses have indicated that the government could earn about N100 billion per annum from this alone. Obviously this surcharge will mainly be borne by middle and upper class people since I do not know many poor people who make calls for more than 3 minutes!”
He didn’t just stop there. He also suggested property taxes. Hear him
“….consider introducing minimal property taxes across the country. This not only raises money for the government but also could be a veritable weapon against corruption since it creates a database of who really owns homes in this country”.
And then Cabotage Act
“Another option to consider would be to fully implement the 2003 Cabotage Act. This is Act stipulates that all cargoes and passengers in the inland and coastal waters be transported by ships and ferries built, owned, crewed and manned by Nigerians,” he said.
“Contrary to the requirement of this Act, there are several foreign-owned vessels providing shipping services locally. Out of about 600 ships that operate within our waters, only about 60 of them are owned by Nigerians and are mostly idle, in violation of the Act.
“Industry sources suggest Nigeria may be losing as much as N2 trillion annually from this anomaly. In addition to raising revenue, a full implementation of the Act could also spur job creation, capacity building, and significant backward integration.”
This is not the first time we are hearing a government official mulling the introduction of a form of communication tax. The National Assembly currently has a controversial 9% communication tax bill on the table which has been rejected by telecommunication industry stakeholders. Mr Emefiele’s comments further fuels this conversation and will be seen by many as a wrong move.
The government is exploring the introduction of new taxes at a time when consumer spending and investments in the economy are close to an all time low. His proposal that calls over 3 minutes be taxed also suggest he may be out of touch with the working of the industry. For example, he opines calls above 3 minutes are mostly made by “rich people” forgetting that GSM companies offer late night calls and other packages that actually reward customers for/with longer talk times.
On the introduction of property taxes, he also opines it is a viable way of curbing corruption. This is yet another example of being out of touch with reality and smacks of a misplacement of priority. Just recently, Nairametrics reported news about a working paper that seeks to increase the power of the CBN, giving them the right to seize and restrict repatriation of foreign currency.
Comments by the CBN Governor are believed to be sending jitters to foreign investors as most of them fear an increase in government interference in businesses. Some of them who have spoken to Nairametrics also fear that there might be a covert attempt to attack businesses of certain countries or regions in Africa further stifling decisions to invest in the country.
This contrasts the government’s push to improve Nigeria’s ranking in the world doing business survey. Increased taxes, capital controls and market manipulations are all inimical to attracting the foreign direct investments required to lead Nigeria back to economic growth. Some critics of the CBN opine the apex bank is probably more inclined towards attracting hot money thus the high interest rates on government debt securities and as such do not believe implementing policies that attract FDI’s are a priority.
The quote from the CBN Governor was culled from The Cable News