We Pay 54 Taxes, Airline Operators Lament; It’s Just 4 – NCAA
Fresh disagreement has emerged between the Nigeria Civil Aviation Authority, NCAA, and the Airline Operators of Nigeria, AON, over the amount of taxes, fees and charges imposed on airlines operating in the country.
While the NCAA insisted that, apart from taxes imposed on each ticket, other charges were cost elements associated with aviation operations, AON maintained that airlines were subjected to 54 lines of taxes, fees and charges, many of which emerged after the various agencies evolved from the defunct Federal Civil Aviation Authority, FCAA.
NCAA also expressed worry that airline operators were creating the impression that they were being heavily taxed, saying the five per cent Ticket Sales Charge, NCAA, for instance, was calculated on a neutral unit of construction, which comprises only the base fare and fuel surcharge.
Representatives of both bodies spoke as panellists at the 30th Annual Conference of the League of Airport and Aviation Correspondents, LAAC, themed ‘Towards Sustainable Aviation Industry: Balancing Government Revenue Demands with Sector Growth,’ held in Lagos.
Speaking at the event, Director-General of the NCAA, Capt Chris Najomo, represented by General Manager of Allied Services & Economic Oversight at the NCAA, Esther Ajijola, said: “Some days ago, I was with one operator.
“After reading an article which stated that there are 54 taxes on tickets, I asked the operator. I called the head of commercial, ‘Can you verify for me? I have a ticket of N114,000, how much is the charge?’ We started calculating.
“On that ticket, Federal Inland Revenue Service, FIRS, charges 7.5 per cent. If you are flying from Bi-Courtney (MM2), you pay N7,000. If you are flying from GAT, you pay N2,500 as your passenger tax.
“And then you pay the five per cent to NCAA, which is four basic on the ticket. Every other tax which you are referring to are your cost elements that come from aviation.
“The impression is that the industry tax them (operators) so heavily. But the five per cent of NCAA, for example, is calculated as a neutral unit of construction, which is your base fare, plus your fuel surcharge only. That is where we take our five per cent.
“When we look at charges, we know that these charges are towards cost recovery of infrastructure. When you look at taxes, you are talking about the national development of a nation. And there you look at what leads to the airport. You are looking at the road, you are looking at the water, you are looking at the energy and that’s where you have your tax.
“But for a government to put revenue generation ahead of safety, ahead of security and customer satisfaction, we are all customers of the aviation industry, I don’t think any government will want to do that.
“But the truth is that aviation is a business. Civil aviation is a business. Civil aviation business is highly expensive and capital-intensive. Human resources and expertise are needed in civil aviation. Civil aviation calls for infrastructure that cannot be put on our sandy roads.
“If you are talking about an aircraft, you want to look at the environment in which you want to put your aircraft. And all this comes as a cost element. Our airlines desire more. We know the challenges are around globally. Yet we cannot compromise not taking revenue. Tax and charges to sustain the aviation industry.”
Meanwhile, Trustee Member of the AON, Mr. Roland Iyayi, disagreed with the NCAA, saying the proliferation of aviation agencies and their separate charges had increased the financial burden on airlines.
He said: “We have the NCAA today. We have the Federal Airports Authority today. We have Nigerian Airports, Nigerian Airspace Management Agency. We have NiMET. All of these agencies, circa 1980, 85, 89, were under the FCAA. That’s the Federal Civil Aviation Authority.
“The Federal Civil Aviation Authority introduced the five per cent Ticket Sales Charge. At the time we had the FCAA, there was only one domestic carrier in the country. And that was Nigeria Airways. For the record, Nigeria Airways did not pay the five per cent Ticket Sales Charge, TSC, on the domestic market. Let’s be clear on that.
“As each agency evolved from the then FCAA, initially it was the NAA, Nigerian Airports Authority. They evolved and became charged with overseeing the airports all over the country. And they introduced the passenger service charge at the time.
“That NAA had an amalgamation of both today’s FAAN and NAMA.
“Then FAAN got out of NAA and became FAAN. NAMA came out in 1999 and became NAMA. Each agency introduced their own charges separately and distinct from the five per cent we are talking about today.
“When you have a situation where ICAO says aviation is premised on cost recovery, circa the document 8632, what we are saying essentially is, as an agency of aviation, you are required to provide services to stakeholders and charge commensurately for the cost recovery.
“What we have in aviation today is not cost recovery. Again, NCAA in 1999 introduced separate charges besides the five per cent.
“So when you look at the context we are talking about in terms of cost recovery and the rest of it, the five per cent Ticket Sales Charge today is superfluous. Because all the essence in terms of what’s required has been taken care of by the various agencies coming out to introduce separate charges for services rendered. Now this is where the problem is.
“When you look at where we have been, take two decades ago. NAMA had 1,200 staff. The recurrent expenditure at the time was 77 per cent, meaning that NAMA had barely 23 per cent for capital expenditure.
“Now, considering what NAMA needs to provide the industry in terms of infrastructure, it is not sustainable. Now, when you look at the issue of bloating of staff at every agency in the country today, there is absolutely no way the charges that all these agencies are charging are sustainable for their operations. Now, that is also compounded by the Treasury Single Account system.
“We talk about taxes, fees and charges. A tax is an unrequited payment by a citizen or corporate citizen or whoever it is to government. By the time government takes 25 per cent, I hear it’s about 40 per cent today, of monies paid by stakeholders to all these agencies; it is assuming, of course, that these agencies are profitable by 40 per cent.
“Again, remember, aviation is for cost recovery. So, when we also have a minister who, when he came in on board, indicated that part of his metrics will be increased revenue generation for the agencies, there we have a problem because already what you’re saying is that I’m going to tax all these agencies or all these stakeholders irrespective just because I want to meet a metric.
“That itself is one of the problems of not understanding what the industry is calling for.
“Where we are today, the continued sustenance of all these taxes, fees and charges, and yes, there are 54 lines of taxes, fees and charges. What I am saying is the continued application of all these taxes, fees and charges is detrimental to the growth of Nigerian aviation.”
