Airline Operators of Nigeria (AON) has vowed that
from June 14, 2018, its members would stop paying Value Added Tax (VAT) to the federal government, estimated to be
over N15 billion annually.
AON made this known in Lagos on Thursdsay during a
meeting of the chief executives of airlines and attributed the short life span
of domestic carriers to poor infrastructure, excessive charges and taxes; high
cost and inadequate supply of aviation fuel.
The airlines accused the federal government of not
being concerned by the above mentioned problems, but insisted that airlines
failed due to lack of professionalism in the running of their business.
Executive Chairman of AON, Nogie Meggison,
described the payment of VAT as unfair, and explained that it is only Nigerian
airlines that pay the tax, while foreign carriers that operate into the country
are excluded as well as other modes of transportation.
“The AON’s
position is that the VAT on airline ticket sales for domestic carriers must be
removed completely forthwith as road transportation, rail, marine and
international air travel carriers are not subjected to VAT,” he said.
He alleged that the federal government is using tax
payers money to fund the proposed national carrier that is supposed to be
private sector driven, noting that with government commitment to the national
carrier, it is evident that it would not give all airlines equal operating
environment.
Meggison also
explained that the establishment of this national carrier had been
shrouded in secrecy and lacks transparency in its entirety, adding that using
tax payers money and it’s apparatus to establishment an airline with a foreign
core investor was not fair to Nigerian airlines and Nigerians.
Also speaking at the meeting, CEO of Top Brass
Airlines, Roland Iyayi, a member of the body, said the government has provided
for zero customs duty on commercial aircraft, spare parts and engines but
unfortunately, in 2018, the industry was yet to fully benefit from this
provision.
This, Iyayi explained, had resulted in airlines
having some of their aircraft fleet grounded for days in some cases, thereby
resulting in cancelled flights which in turn results in chaos at the airports
to the displeasure of customers, adding that this situation is unacceptable and
should be reversed forthwith.
On the Nigeria Civil Aviation Authority, (NCAA) 5
percent ticket sales/charter sales charge, he said airline operators have
always contended that the imposition of a percentage tax model creates a
distortion in the industry.
“We have recommended and continue to recommend that
the unit tax model preferred and practiced by over 90 per cent of countries
globally and as recommended by the International Air Transport Association
(IATA) be adopted immediately. It is worthy of note that all the industry
agencies, including the NCAA regulator, are established as not-for-profit
organisations, essentially designed for cost recovery.
“Unfortunately, over the years, successive
governments have encouraged the sourcing and increase in internally generated
revenues (IGR) by these agencies, thereby completely negating the primary
purpose for which they have been established,” he added.
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