THE WHISTLER
A Fiscal Policy Partner and Africa Tax Leader at PwC,Taiwo Oyedele, has faulted the new Proof of Ownership Certificate (POC) fee imposed on all categories of registered vehicles.
Oyedele, who is Chairman of the West Africa Debt Management Roundtable of the Nigerian Economic Summit Group (NESG) and Chairman of the Taxation & Fiscal Policy Faculty Board of the Institute of Chartered Accountants of Nigeria (ICAN) described the tax as “retrogressive.”
In a series of tweets on Saturday, the PWC Africa Tax Leader said the new tax is badly conceived and poorly designed.
He said, “This tax is retrogressive. It is ill-conceived and poorly designed. 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.
“The tax adds complications to the myriad of multiple taxes which make doing business difficult and dampens tax morale.”
On June 27, Engr AbdulHafiz Toriola the Permanent Secretary, Ministry of Transportation announced that car owners would begin to pay car ownership fee which is a minimum of N1,000 depending on the vehicle class and it is expected to be implemented by other states.
“This certificate upon successful completion of the necessary requirements and procedures, will serve as part of official documentation of a vehicle’s legal owners,” Toriola said.
According to the most recent data from the National Bureau of Statistics, registered cars in Nigeria are 1.8 million as of 2018.
The United States International Trade Administration said smuggling, grey imports of used vehicles, and the lack of reliable data make the exact size of Nigeria’s vehicle market difficult to quantify.
Nigeria’s annual vehicle demand is 720,000 units and local manufacturers supply only 14,000 units leading to massive importation.
But Oyedele said based on the car estimate, the government may gross an average of N12bn annually.
Oyedele argued, “If we assume that everyone complies and pays to the government, the tax will generate gross receipts of N12 billion annually before taking account of the likely high cost of collection and possible leakages in addition to the unquantifiable time, cost and burden of compliance by vehicle owners.
“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 Value Added Tax (VAT) on diesel needs to be reconsidered.
“The tax should be set aside in the interest of good order and to prevent setting a bad precedent. Who says we cannot be asked to also renew our birth certificates, C of O, etc on an annual basis if this succeeds?”
