Without the embrace of socialism, the Jonathan administration has introduced one of the most cherished components of egalitarian rule – the luxury or “sin” tax.
When I read about its coming, it was hard not to admire the Minister of Civil Aviation, Stella Oduah for allowing the Nigerian Civil Aviation Authority, NCAA to charge private airline operators between USD 3,000 – 4,000 for each flight they operate.
I have read several complaints by the operators who have vehemently denounced the USD 3,000 payable for every flight by a private plane registered in Nigeria and USD 4,000 for a flight by one that is registered abroad, who say that this is an “outrageous, multiple taxation”. They are threatening to leave Nigeria for Ghana. Let them go if that is their wish.
I am in full support of luxury tax, elsewhere called “sin tax” although my support for it is a qualified one.
In a booming aviation industry that needs to be matched by a surge of infrastructure projects to meet demands, a thinking that is exceptional and unexpected is required to generate money for expansion works so that the service meets demand.
On Monday last week, the popular Abuja FM Radio, Vision FM 92.1 revealed that there are about 150 private jet owners in the country today. Of these, 96 of them are Nigerians of South-South origin, which raises another question of uneven income distribution across the country’s geopolitical zones. There is no evidence yet, linking the ownership of luxury aircraft to the theft of crude oil, which a recently-visiting US State Department official said was nearing 50-50.
Luxury taxation aims at not only getting more money for the government’s projects but is also an attack on unwanted consumption habits. Those who enjoy privileges far and above the rights given to all citizens must bear a burden commensurate to those privileges. Taxation, not just under socialism ought to be a tool for reducing inequalities in wealth and incomes as it is a means of regulation and control.
In that regard, luxury tax now introduced by the aviation sector ought to be a government-wide policy, embracing corporate and individual taxes as well as the Value Added Tax, VAT. Around the world and Europe in particular, income taxes, depending upon income brackets, could be as high as 50 percent in Slovenia, Belgium and Austria. Finland charges up to 53 percent while Denmark and Sweden charge up to 55-56 percent. The VAT is up to 24.5 percent in Finland and 25 percent in Croatia.
In line with this, government should expand the scope of the new tax, to cover those “sinful” items and tax them the more and more, so that citizens are forced to change unwanted habits. Items such as tobacco, alcohol, jewelry, high-end automobiles, private jets, luxury homes and boats ought to be targets for higher taxes here as they are in most developed systems.
At a time when the prospect of oil continuing as the mainstay of our economy becoming bleaker, taxation ought to return to its pride of place as the main avenue for raising incomes to defray the ever-rising expenses of government. Because luxury tax affects only the affluent few, it shouldn’t anger the majority of the population who are at the receiving end of the shortfall in government revenues.
This particular tax by the aviation ministry would get the support of all Nigerians if the money so raised is used to upgrade the embarrassing state of aviation facilities such as you have in Kano International Airport.
This money should not be used to finance “neighbor to neighbor” re-election campaign as is suspected by many people. If they do this, it will offend not only the sense of fair electoral contest but also breach the constitution and for which officials may be jailed. I cited Kano Airport because it is a shame that after supposedly sinking the N5 billion contract sums allocated, you still don’t have an airport you can use. Palestinians built an excellent facility at Gaza with far less amount and in less than a year.
Three years down the road, Aminu Kano Airport is still work in progress. When I cited the de-development of the Airport some weeks ago in an opinion that echoed the concerns of the Kano Chambers of Commerce, the aviation sector spokesman embarked on advertorials blackmailing the people of the state, saying that the cause of the backwardness of the airport is the lack of security – a rejoinder many considered as being insensitive and an insult. Did they mean to tell Nigerians that money for the airport’s completion was diverted to fight Boko Haram? If yes, that should be good for the nation, so long as some of it did not stray into neighbor to neighbor.
On a final note, let it be stated that the future of government prosperity lies in initiatives such as the one under discussion by the ministry of aviation. Government must open up both their imagination and their stranglehold on expansion works of infrastructure by subscribing to private-partnership.
Government needs more money to provide more services and those of you out there with a surplus as to own private jets must make the sacrifice of paying more so that those services as we all require them at the airports will be provided and improved. The luxury tax is a good start in that direction.
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