Saturday, February 24, 2024

FG targets N12bn from new vehicle tax


  • Tariff is retrogressive, ill-conceived, poorly designed – Expert

The Federal Government is set to make about N12bn a year from the N1, 000 Proof of Ownership Certificate verification fee motorists are to pay.

Last week, the Permanent Secretary, Lagos Ministry of Transportation, Abdulhafiz Toriola, disclosed this.

He stated that this certificate would help vehicle owners and the government to assure the integrity of all vehicles registered on the National Vehicle and Identification Scheme database and track car theft and recovery of stolen vehicles.

He said, “To this end, the Federal Government has introduced the issuance of an annual Proof of Ownership Certificate for all registered vehicles.”

According to the National Bureau of Statistics, there were 11.76 million vehicles in Nigeria as of Q2 2018, and the vehicle per population ratio was put at 0.06 for the period. According to various reports, Nigeria imports about 400,000 vehicles annually.

A report recently stated that a total of 192,287 vehicles were imported through the Ports & Terminal Multipurpose Limited into the country in the first 10 months of 2021, while only 114,159 vehicles came through said terminal in the same period of 2022.

Toriola stated that the Proof of Ownership Certificate will serve as official documentation for a vehicle’s legal ownership.

He said, “The POC will contain vital information, including the vehicle’s registration details, such as license number plate, model, year of manufacture in addition to the owner’s name and address.

“Having critically reviewed the challenges encountered in ensuring the promotion of Safety and Security of lives and property through the issuance of POC nationally and especially in our dear state, the Joint Tax Board, in its communiqué issued at the end of the emergency meeting held on May 9, 2023, adopted, and made a resolution that proof of ownership be issued to motorists on an annual basis nationwide.”

He added that Lagos would begin collection of POC fees from the beginning of July. Other states are yet to make their positions known yet.

However, mixed reactions have trailed this move by the government, and the Fiscal Policy Partner and Africa Tax Leader at PwC, Taiwo Oyedele, has stated that the tax is retrogressive, ill-conceived, and poorly designed.

He said, in a LinkedIn post, “Apart from the payment which seems to be solely for revenue generation, and perhaps more for non-state actors than for the government, it is illogical to have to prove annually that you own a vehicle for which you already have a certificate of proof of ownership issued by the government.”

He noted that the tax adds complications to the myriad of multiple taxes which make doing business difficult and dampens tax morale.

He added, “While this tax will not necessarily stop the earth from rotating, it is wrong both in terms of signaling from a multiple taxation perspective and in terms of timing given the recent fuel subsidy removal.

“To be sensitive and demonstrate empathy, the government should not impose any new or higher taxes on transportation, energy, or food which are the most impacted by the subsidy removal. The same reasons why the recent attempt to collect VAT on diesel needs to be reconsidered.”

Oyedele further stated that the tax should be set aside in the interest of good order and to prevent setting a bad precedent.

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