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Luxury tax on private jets

RATHER than being perceived as the ultimate solution to the dire need for the Federal Government to expand its revenue base, the proposal to impose special luxury tax on private jets in the country should be taken as the first step.
PHOTO: orientskys.com

PHOTO: orientskys.com

RATHER than being perceived as the ultimate solution to the dire need for the Federal Government to expand its revenue base, the proposal to impose special luxury tax on private jets in the country should be taken as the first step.

The aim should be not just to shore up revenue, but also to correct the imbalance in the distribution of the commonwealth.

The preponderance of private jets is only one of the numerous avenues showcasing this imbalance; and government could extend its tax dragnet to curtail excesses in many other avenues. The crucial factor, perhaps, is to ensure that the extra revenue thus generated goes to reducing the prevalence of poverty afflicting majority of Nigerians.

In view of the considerable reduction of revenue owing to the slump in oil prices, the Federal Government has proposed special levies on the aviation sector which include a luxury tax on private jets. It is incongruous that more than half of Nigeria’s teeming population are living in poverty despite the country’s abundant resources.

And yet, the nation is also reported to be home to the highest number of private jets on the continent, with more than 190 local and foreign-registered private jets in the country. In addition to other levies on business and first-class travellers, the luxury tax is projected to fetch government N37.9 billion yearly. 

Against the backdrop of stark poverty in the midst of plenty, the huge interest in the acquisition of private jets by some rich Nigerians is understandable. The models of private jets owned by private persons in Nigeria include Bombadier Challenger 604 and 605; Global Express and Global 6000; Hawker Siddley 125 and 900; Gulfstream 450,550 and 650 Embraer Legacy, Fenum and Citation. The rate at which Nigerians have been buying the jets is inversely proportional to the jets’ rising prices. Thus while the luxury tax may not dent the buyers’ accounts, it would help government to improve the well-being of the rest of the citizens who are not as financially endowed as these private jet owners.

According to the Ministry of Finance, all local and foreign private jet owners in the country would now pay a yearly surcharge of N3,200 per kilogramme on the weight of each aircraft. The maximum take-off weight of the common models of the private jets ranges from 8,000 kg to over 17,000 kilogramme.

Using an average maximum take-off weight of 13,000 kilogramme per jet and the N3,200 surcharge announced by the ministry, the Federal Government is expected to generate N41.6 million yearly from each private jet owner. If this is multiplied by the 190 private jets in the country, the government is expected to generate N7.9 billion from the sector. 

The ministry added that in view of increasing foreign travels by Nigerians, all first and business-class tickets to overseas’ destinations would attract a flat rate of N15,000 each as surcharge, adding up to N37.9 billion yearly.   

Indeed, the luxury tax has become overdue considering that some of these jets which were brought into the country to be used for private purposes are now being deployed for commercial flights. It is, therefore, appropriate that owners of these jets are made to pay a little part of what may accrue to them as profit from the commercialisation of their aircraft.

However, the government’s luxury tax policy should exist holistically with a resolve to ensure that operations of these jets are compliant with best practices in the sector. If the jets are being used for commercial purposes, have they met the requirements for commercial aircraft in the sector?  All possible precautionary measures should be taken now to keep the airspace safe for all its users. The Federal Government cannot afford a return to an era when the airspace was endangered by malfunctioning aircraft that resulted in crashes and loss of lives and property.

In so far as the special levies in the aviation sector are meant to boost its revenue, the Federal Government should explore other areas where this policy would be applicable.  Rich Nigerians also indulge in other ostentatious lifestyles that could be taxed. If this is one means wealthy Nigerians may share part of their good fortunes with the rest of the citizens, then the government is encouraged to extend the policy beyond aviation.

Ultimately, funds realized from these taxes will be meaningless unless they are judiciously deployed to improving the lot of the people. Government should ensure that it does not take money from wealthy Nigerians only to be diverted into the private pockets of its officials.  It is the prudent use of the revenue from this policy of special levies, including the luxury tax on private jets, that would validate its relevance in the

4 Comments

  • Author’s gravatar

    I hope this policy is pursued vigorously and properly executed,but knowing our goverments, it may just be hot air as we have been accustomed to. I hope the guardian play it’s role in this matter.

  • Author’s gravatar

    <❶❷❸.%@^@^@^!^!^!^!^.. +ngrguardiannew +Part-time working I looked at the draft which said $9958@mk6 < Read more info here='' ……..''

    3

  • Author’s gravatar

    How much is N3,00 calculation by these callous corrupt civil servants who are under ground owners of some of these private jets? Who is fooling who?.We shall all see where it will end.Just imagine some of these people with billions of dollars in their foreign bank account and you are talking of a scandalous N3,000 surcharge per weight or what?. I dont care what you based your calculation on its just irritating.!!!!!!!!!!!!!!!!!!

  • Author’s gravatar

    guardian i just posted a comment some minutes ago WHY did you delete that comment? Truth is bitter !!!!!!!!!!!!