Nigeria’s FG Creates New Tax On Phone Calls To Fund Free Health Care Scheme

Nigeria’s Federal Government has created a new tax on phone calls with the aim of raising funds to fuel a free healthcare scheme intended for people who cannot afford healthcare; vulnerable people as they were referred to by the government.

People who fall under this category called “vulnerable people” include children below the age of five, senior citizens, mentally challenged people, pregnant women, and anyone deemed to be under the category.

The new law which enables taxes on phone calls is embedded in the recent National Health Authority Act 2021, which the President of the Federal Republic of Nigeria, Muhammadu Buhari signed just last week. Per the provisions of Section 26 sub-section 1c of the act declared that the source of money for the Vulnerable Group Fund includes “telecommunications tax, not less than one kobo per second of GSM calls.”

The act also cited other sources of income for the Vulnerable Group Fund to include health insurance levies, donations, grants, gifts, the Basic Health Care Provision Fund, and any other voluntary contributions. The law also requires that Nigerians are expected to obtain health insurance.

By calculation, phone calls will be taxed at least 9 percent every second with average call rates of 11 kobo per second.

According to information obtained from the Nigerian Communications Commission in a report it issued, Nigerians made 150.08 billion minutes of phone calls in 2020, which is the same as 9.05 trillion seconds of calls. Using this as a base, it means that at least ₦90.49 billion can be generated in phone call tax for the Vulnerable Group Fund every year.

For now, no date has been set for the phone call tax to take effect or how much it will be but one thing that’s bound to happen is a hike in call rates in Nigeria as it doesn’t look like telecommunications companies will be willing to cover the costs.