Airlines operators lament abandoned report on multiple taxation
To suspend payment of 5 per cent VAT from June 14
Airlines operators in the country have alleged that the presidential taskforce report and recommendations on multiple taxations in the aviation sector have been abandoned.The report, which was submitted a couple of months ago, has neither been made public nor implemented.
The committee, in which major aviation stakeholders and airlines were represented, was inaugurated in August 2017 to review and harmonise over 37 levies and charges that the airlines operators pay to government and regulators.
Airlines Operators of Nigeria (AON), said at a meeting of chief executive officers (CEOs) in Lagos yesterday that the harsh operating environment has continued to put the seven surviving airlines under severe strains.
They have, therefore, resolved to stop remitting the mandatory five per cent Value Added Tax (VAT) with effect from June 14, 2018.The Guardian had reported a year ago that the charges, taxes and levies at airports nationwide, accounted for 65 per cent of revenue accruing to the airlines and explains why they are often in financial distress with the attendant debt burden estimated at N15 billion as at last year.
Chairman of the AON, Captain Nogie Meggison, noted that over 50 indigenous airlines have existed in the country in the last 18 years, but only seven were flying presently.He said: “The mortality rate of airlines in Nigeria is high. The owners of the defunct airlines have all been success stories in other business endeavours except in aviation.
“Could all of them have been responsible for the failure of their airlines? The answer is no! Rather, the unfriendly policies and harsh operating environment have been the bane of aviation sector’s growth in Nigeria.
“We are mindful that if these issues and policies are not addressed urgently, the remaining airlines run the risk of becoming defunct in no time,” Meggison said.The group argued that the Nigerian airline travel was the only mode of transportation that is subjected to VAT payment.
“This imposition creates a suppression of demand for domestic airline travel, thereby, resulting in airlines’ inability to optimally utilise their aircraft assets and more importantly, create market distortion.”
“AON’s position is that the VAT on airline ticket sales for domestic carriers should be removed completely as road transportation, rail, marine and international air travel carriers are not subjected to VAT.
“The AON urges the Federal Government to review its policies on these matters and address our concerns as enunciated in the position paper presented to the Presidential Task Force on Aviation by the AON,” it stated.
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