Nigerians reject government’s N90bn telephone call tax to provide free health care

Telecommunication subscribers across Nigeria are kicking against the new act by the Federal Government (FG) that aims to subsidise the provision of healthcare for vulnerable Nigerians by imposing a new telephone tax regime.

The FG is planning to place a tax on telephone calls (call tax) of subscribers across the country to a tune of 1 kobo per second. The accrued estimated amount may amount to N90 billion annually.

The new tax order is contained in the new National Health Insurance Authority Bill 2021 signed by President Muhammadu Buhari last week.

The bill describes vulnerable persons in the country as “Children under five, pregnant women, aged, physically and mentally challenged persons, and indigent people as may be defined from time to time.”

The new call tax follows an initial proposal by Telcos service providers in the country last month to increase the tariffs on calls, data and SMS by 40%. The proposal was met by disapproval by the NCC who claimed it was yet to be fully ascertained the operational cost of the network services and the estimated effect these costs may have.

Related: How a 40% increase in call, data tariff will affect Nigerians

The health insurance plan and its pain

According to the Health Insurance Act signed into law, the Vulnerable Group Fund is budgeted to pay for healthcare services for Nigerians who cannot pay for health insurance in a bid to subsidise the cost of provision of health care across the country.

The Act includes a provision under Section 26 subsection 1c which states that one of the sources of money for the Vulnerable Group Fund shall include a telecommunications tax, not less than one kobo per second of GSM calls.

Other than the call tax levied on telco subscribers, the Vulnerable Group Fund is primarily funded through investments made by the Council, which will be established to handle the fund. Grants, donations, gifts, and other voluntary contributions to the Vulnerable Group Fund shall be pooled for a fair distribution.

But the big question many have been asking is: why should providing health insurance for vulnerable Nigerians (which is the sole responsibility of the government become a burden for the citizens?

What obtains in other climes

The United States of America (USA) for example provides a major template for a health insurance system. The US health care plan runs a three-pronged healthcare insurance system- Medicare, Medicaid, and the CHIP.

Medicare is a federal social insurance program for seniors (generally persons aged 65 and over) and certain disabled individuals. Medicaid on the other hand is a joint fund by the federal government and states but administered at the state level, which covers certain very low-income children and their families.

The last is the CHIP, also a federal-state partnership that serves certain children and families who do not qualify for Medicaid but who cannot afford private coverage (similar to examples of primary health programs in the U.S).

Other public programs include military health benefits provided through TRICARE and the Veterans Health Administration and benefits provided through the Indian Health Service.

The major source of funding for these programs is the expenditure of the government on health, state provision, and sometimes, private partnership. The U.S provides for this by either increasing its budget deficit, cutting other social welfare programs or general tax increases.

Countries like Kenya for instance run the National Hospital Insurance Fund (NHIF), which is Kenya’s equivalent of a social health insurance fund. All employees in formal employment who earn greater than Kenya Shillings 1000 make contributions to the fund (National Hospital Insurance Fund 2011) which amounts to 60% of funding, while the ministry of health covers the rest.

Although Ghana runs a similar payroll deduction of up to 50% to provide Primary health care coverage for certain persons and communities, the PHC is primarily funded by internally generated funds, funding from partners, NGOs and members of Parliament’s health fund. The local communities contribute in the form of providing labour for building infrastructure for Community Health Programs (CHPS) compounds.

Telecoms subscribers reject call tax

The tax deduction from calls would definitely result in an insignificant increase in call tariffs for the average Nigerian. However, Nigerians are scared this may be the beginning of a never-ending increase in taxes and levies imposed by the government on various basic items in the country.

This further verifies the statement of the Minister of Finance last year in which she insinuated that increases in tax and tariffs would not come to an end soon. In a statement to the House committee on finance, she said that Nigerians should expect “modest increases in taxes and tariffs on certain businesses and individuals over the medium term”.

Expect more taxes and tariffs?

Telecom subscribers under the aegis of the National Association of Telecoms Subscribers, have outrightly rejected this new tax by the government.

The President of the association, Adeolu Ogunbanjo, said that “It is quite unfortunate that the government is viewing telecoms as a cash cow. We are saying. There is a lot of corruption in the system, and rather than curb that they want to focus on the telecoms sector.

What do they mean by vulnerable? Vulnerable people in the nation are probably about 80 per cent of the population, we are all vulnerable. What has happened to the health budget? Why should it touch telecoms again?”

The government should look elsewhere for money. This new action is only likely to impoverish more Nigerians and they are masquerading as helping the vulnerable. This is not right.

Adeolu Ogunbanjo, The President of the association

In response to the direction, the NCC and Association of Licensed Telecommunication Operators of Nigeria (ALTON) plan to meet this week to discuss the issues disturbing the industry, according to a report by Punch.

It’s yet unclear when and how much this new tax will cost, but it suggests that call rates would rise in Nigeria, as telecom companies are unlikely to absorb the cost.