Domestic Airlines Operators of Nigeria, AON say from 14th of June, remittance of Value Added Tax, VAT to the Government will stop.
The AON has therefore vowed to ground flight operations in the country if government refuses their decision to stop VAT remittances.
Briefing newsmen in Lagos, AON Chairman, Captain Nogie Meggison said the VAT collection was unfair and debilitating to the Nigerian passengers and the industry.
He said it was only the domestic airlines that pays VAT while other modes of transportation, rail, road, marine and foreign airlines that were not subjected to remittances of VAT, adding that such imposition creates a suspension of domestic airline travel demand.
“Nigerian Domestic Airline Travel is the only mode of transportation that is subjected to the Value Added Tax (VAT). The AON’s position is that the VAT on airline ticket sales for domestic carriers must be removed completely forthwith as road transportation, rail, marine and international air travel carriers are not subjected to VAT”
Besides creating distortion in the air travel market , Meggison said the imposition of VAT had created a suppression of domestic airline travel demand; therefore resulting in airlines not being able to optimally utilize their aircraft assets and more importantly creating a market distortion.
“Moreover, a situation whereby some airlines are paying VAT while some other privileged airlines are not paying VAT and the VAT which we pay is being used to subsidize our competitors against those that are making payment is unfair”.
Also reacting on the NCAA 5% ticket sales and charter charges, the AON recommended that the Federal Government put in place the necessary mechanisms to reverse the percentile tax model and adopt the global best practice of the Unit tax model, while taking due cognizance of inflation.
“The AON has always contended that the imposition of a percentage tax model creates a distortion in the industry. We have recommended and continue to recommend that the unit tax model preferred and practiced by over 90% of countries globally and as recommended by IATA be adopted immediately.
It is worthy of note that all the industry agencies including the NCAA Regulator are established as Not-For-Profit organizations, essentially designed for Cost Recovery.
“Unfortunately, over the years successive governments have encouraged the sourcing and increase in internally generated revenues (IGR) by these Agencies thereby completely negating the primary purpose for which they have been established”.
He noted that,” this in turn, has resulted in serious wastage of scarce fiscal resources within some of these Agencies to the detriment of the traveling population”.
