Public Management

Nigeria approves phone tax to fund healthcare plans

Monday, 23 May 2022 20:56
Nigeria approves phone tax to fund healthcare plans

(Ecofin Agency) - The tax is introduced to guarantee healthcare for the whole population, even the most vulnerable. 

In Nigeria, President Muhammadu Buhari (photo) signed, last week, the National Health Insurance Authority Bill 2021. The said project provides for a 1 kobo levy for every call second to fund healthcare for the most vulnerable.  

According to Taiwo Oyedele, Africa Tax Leader at PwC, "the tax is one of the sources of money to the Vulnerable Group Fund to subsidize the provision of healthcare to the group defined to include children under five, pregnant women, the aged, physically and mentally challenged, and the indigent as may be defined from time to time.”

Other sources of funding for the Vulnerable Group Fund include the Basic Healthcare Provision Fund, health insurance premiums, grants, donations, and voluntary contributions.

The bill was first mentioned in December 2021 by Mohammed Sambo, executive secretary of the National Health Insurance Scheme (NHIS). It was signed by President Buhari about two weeks after telecom regulator NCC rejected a 40% tariff hike proposed by some telecom operators to face rising operating costs.   Following the 40% hike rejection, operators asked the government to review the various taxes they are subjected to, hoping there could be ways to reduce their operating expenses.  

Currently, the average call rate is 11 kobo per second. A 1 kobo levy equals about 9% tax rate. According to the Nigerian Communications Commission (NCC), Nigerians made 150.83 billion minutes of calls in 2020. That translates into 9,050 billion seconds of calls, meaning the new tax will generate at least NGN90.5 billion annually. 

Isaac K. Kassouwi

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