Why Nigeria’s new luxury tax policy is yet to take off – Adeosun

The federal government said on Sunday that its plan to introduce luxury tax in the country has been delayed because of some legal protocols required to be met before the take-off of the policy.

The Minister of Finance, Kemi Adeosun, told journalists at the end of the annual meetings of the World Bank and International Monetary Fund, IMF in Washington on Sunday that government was perfecting plans to commence the collection of luxury taxes as soon as these legal processes have been resolved.

“There is a legal process government must go through, including the customs union protocol to actually vary the specific taxes,” the minister explained.

Mrs. Adeosun pointed out that the luxury tax planned by the federal government would cut across member states of the Economic Community of West African States, ECOWAS, with the affluent in the society in direct consideration.

In August this year, while giving clarifications on the Nigerian government’s plan on diaspora taxes during a Facebook LIVE video chat tagged “Tax Thursday” monitored by PREMIUM TIMES, Mrs. Adeosun had explained government’s plan on luxury taxes.

During the chat, the minister said there were plans to tax first class tickets on airline travels and luxury coaches, as well as other luxury goods like champagne, brandy, whisky, wine, jewelry, high-end jewelry.

“We’ve signed something that will bill access charge on first class and business class tickets. We are just doing the final parts of the implementation and we also want to try and amend the tax payer book on high end cars, luxury cars,” she said.

On Sunday in Washington, Mrs. Adeosun said the problem government was facing was not just that the system needed to be overhauled, but that people were not complying with the rules, because there was no consequence.

“We have just started with Voluntary Assets and Income Declaration Scheme, VAIDS as a measure to tackle that and the response is impressive. In any tax system, the burden must be borne by anybody whose income allows to bear it, so those with higher income should by definition, bear a greater part of the burden.

“In fact, people have started declaring, and I have had a number of approaches from high net worth people asking me to speak on their behalf to state governors to allow them time to comply because their personal taxes are payable to state governments,” she said.

Besides, she encouraged government functionaries in the states to give people who voluntarily come forward for payment of tax enough time to do so, adding that the amount of tax that they would have to pay is big.

“Whether taxing the rich will increase public revenue or not, it is all about public revenue to which they are obligated for public services.

“The problem currently is that those at the lower level of tax system are the ones paying. If the man in the traffic control, with little income will pay at source, why should we not pursue the billionaire or the trillionaire to pay out of the income? We need to change the mind set in the country with regards to tax system,” Mrs. Adeosun said.