First Class Fliers To Pay More As FIRS Raises New Taxes

imageLUXURY class fliers are paying more for their comfort on their flights.
The Federal Inland Revenue Service (FIRS), desperate to fatten Nigeria’s lean purse, has introduced new taxes. Among them is a N15,000 levy on first class and business class travellers.
Besides, private jet owners are to pay taxes for enjoying the luxury.
The battle to open other tax avenues is coming amid the bad fortune of oil and gas —the economy’s live wire.
FIRS Acting Chairman Sunday Samuel Odugbesan, who led other officials of the Service, spoke when they visited Senate President Bukola Saraki in Abuja.
Besides the downward slide of oil price, according to the FIRS boss, there are insecurity, the uncertainty caused by the general elections and the late passage of the 2015 budget.
Odugbesan told the Senate President that the FIRS collected N697.07 billion from Petroleum Profit Tax in the first six months of the year. The non-oil component income tax, yielded N778 billion between January and June and Value Added Tax N376billion.
He said the FIRS was expecting between N12 billion to N15 billion monthly from the Nigeria Customs Service (NCS).
The FIRS boss put the annual target at N1.4trillion; N123.74bn is expected monthly.
He described the total tax collection as “the worst performance for the oil industry in the last 15 years”, saying the Service collected only N50bn from the sector.
Odugbesan explained that the reason for this was because three major oil companies had nothing to pay because of the huge increase in cost of production.
He said the FIRS was already working out new tax regimes to shore up its revenue collection.
Part of the new tax regime, Odugbesan said, is to tax private jet owners, mansion owners and traveller who fly business and first class.
Odugbesan said the FIRS was made to understand that there are more that 130 private jet owners in the country.
He said the FIRS raised N100 million from a particular company that operates private jets.
He added that it planned to convince the government to tax those who fly first class and business class.
Odugbesan said: “We received a letter inviting us to appear before you so that we can share some thoughts and we have given you copies of our presentation.
”This is as a result of many factors many of which are completely outside our control.
“The price of oil in the international market that we all know has continued on the downward slide although in the last three months; it started gathering some momentum.
“As at today, I think it averages $ 62, but the average we have computed is $59. That is what is obtainable today.
“So what is within our purview is actually what intervention we can make to shore the collection from non-oil sector.
“As at the end of June, we have not actually got the total figures for June yet, which just ended yesterday. And for JP Morgan that is assisting the Federal Government to collect foreign component of our collection, they will still give us report a week after the close of the month.
“Why is it low this way? Everyone knows that for the first quarter and even the second quarter, there hadn’t been much activity in the land, the month of March and April, fears of uncertainty.
“If you add that to the insecurity situation in the Northeast, most of our offices, they have to be hiding to do their work. It is that bad.
“The other is that government is the biggest spender; when government sends money into the economy, it creates activity. Even the banks themselves would be in the position to loan out money to business entities.
“You engage everyone. We see the oil sector as the sector that is really driving because it is the mainstay of the economy but we often do not realise that if government does not support that sector, through cash calls, virtually nothing would happen in the oil sector.
“If government does not spend money, the withholding taxes from that sector is not realised and the value income tax is not realised, Bureau of Statistics will tell us that the aggregate level of consumption has actually gone down.
“And that affects Value Added Tax because VAT is a consumer tax.
“What is significant is that May/June, we are witnessing the highest collection in the last 10/12 years.
“The spike here in June, which is taking in about N702bn for this month, it would be about N715bn at the end of the month by the time we include Nigeria Customs Service collection.
On the challenges the FIRS is contending with, Odugbesan said: “Since 2012, until the exit of my former boss, FIRS has no board, no substantive board. There are some actions that are very critical and are being delayed.
“Encroachment into the powers of the FIRS but very recently the National Assembly passed an Act to establish the Abuja/FCT board of FIRS.
“The law says government is at liberty to select who should do the collection for the FCT. And I think in the last 35 years, it’s been given to the FIRS.
“Now you have an Act that empowers the FCT board to collect personal income tax within the FCT; you are taking away the powers of the FIRS to go into the consolidated account because they will now be taking that money for themselves. Low level of consumption in the economy.
“There is no hiding place anymore. There will be transparency but we need information because without information, no tax administration in the world can function or perform effectively.
“The Joint Tax Board (JTB) platform was developed so that all of us can speak as a country.
“There are three states that have not keyed into that platform. Lagos State, for whatever reason, it could be borne out of fear, they always think that the centre wants to take their responsibility.
“We were working to get everyone doing business in Nigeria into our system. We are also working with the Central Bank of Nigeria (CBN) to enable us have access into the account of everybody doing business in Nigeria.
“The idea of collecting our VAT upfront from telecommunication companies, airlines operators and from the power sector has appealed to us.
“And all the regulatory bodies have also given us their word. At the moment, it is only the airlines that we are collecting upfront within the country.
“We have introduced some set of new taxes that are not in the law. We call them sub-charges on air tickets.
“If you are travelling out, you pay N15,000. If you are a business class flier or first class flier.
“We also looked at those who owned private jets. We thought that you enjoy facility or asset, which most Nigerians do not have access to enjoy. We would levy something we call sub-charges on you.
“And of course, Custom wants to do something like furniture sub-charge, mansion sub-charge.
“Regrettably, we have not been able to administer this. One, we need assessment on about 130 private jet owners because we were made to understand we have up to that.
“We raised assessment on them. One particular company we raised about N100 million on them.
“We have our own doubts about some of these levies too. For instance some people who are flying business class or first class, N15,000. How many are they? How many people fly first class or business class. Will that N15,000 times that number guarantee the kind of revenue source that we need to finance it.
“If you have mansion in Abuja, levy sometime two per cent on the value. Abuja wants to do property tax. So would that not be additional burden?
Saraki said the country needed a broad-based efficient tax system.
“The success of our revenue collection depends on FIRS. We need to develop and depend on the non-oil sector. Senate will be very stringent in its oversight.
“The issue of surcharge is not the issue, the issue is how to expand the revenue through income tax. Tax holidays should stop.
“We should stop deceiving Nigerians; the issue is how do we improve on company income tax. Some of the oil companies, how do we.

Leave a Reply

Your email address will not be published. Required fields are marked *