Nigeria’s new health care tax adds to operators’ woes

Nigeria’s new health care tax adds to operators’ woes

The recently announced Nigerian government plan to impose a tax on phone calls in order to finance free healthcare for the vulnerable has come under fire from the country’s operator association.

Representative group the Association of Licensed Telecommunications Operators of Nigeria (ALTON) has suggested that subscribers will be hit, getting less value for what they pay for.

The National Health Insurance Authority Bill was signed into law last week. It includes a provision stating that the source of money for a Vulnerable Group Fund includes a telecommunications tax – not less than one kobo per second on cellular calls. A kobo is one hundredth of a naira; one naira equals US$0.0024. One analyst quoted in the local press estimates that, with call rates at about 11 kobo per second, this translates to a nine per cent tax on calls.

The Vulnerable Group Fund aims to ensure coverage of 83 million Nigerians who cannot afford to pay premiums. Other sources, including a health insurance levy and a special intervention fund, will support the initiative. The new act also requires Nigerians to obtain health insurance.

The new taxes mean that levies on telephone calls in Nigeria have risen by about 300 per cent in the last three years. They include duty on recharge cards and vouchers, a healthcare levy and VAT.

Operators have also been hit by diesel costs – diesel is often used to power base stations – which, they suggest, have gone up by well over 200 per cent in recent months. It does therefore seem likely that tariffs will go up as phone companies transfer all these extra costs onto users.

There are also question marks on the use of the tax. As one commentator pointed out, without adequate safeguards, poor implementation, lack of transparency and misuse of proceeds could also be issues.

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