NBA to challenge in court new vehicle tax which it says smells of illegality
By Jeph Ajobaju, Chief Copy Editor
Only Lagos has announced plans to begin collecting this month the N1,000 tax for Proof of Ownership Certificate (POC) on vehicles, but the Nigerian Bar Association (NBA) already sees it as a rip off that must be challenged in court.
Tha NBA Section On Public Interest Law (NBA-SPIDEL) has set up a team to examine the legality of this new federal tax that adds to other myriad of taxes making Nigerians poorer.
A statement jointly signed by NBA-SPIDEL Chairman John Aikpokpo-Martins and Secretary Funmi Adeogun announced the proposed lawsuit.
“Pursuant to our mandate as the Nigerian Bar Association Section on Public Interest Litigation and Development Law (NBA-SPIDEL) which, amongst others, is to defend the interest of the public against oppressive and illegal policies of public authorities, and the overall objective of the NBA to defend the rights of the people, we, the officers of SPIDEL hereby set up this legal team to critically examine the legality of the policy and take necessary legal actions, including litigation, to frontally challenge same immediately,” the statement said.
It listed members of the legal team to include Kunle Edun, Francis Ogunbowale, Maxwell Opara, Felix Akpowowo, Adeola Folarin, Ibrahim Al-Hussein, and Izu Aniagu.
“The consultant to the team is Ikeazor Akaraiwe, SAN,” the statement added, per Vanguard.
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Abuja angling for N12b revenue yearly from new vehicle tax
Abuja will make about N12 billion revenue a year from motorists who will pay N1,000 each for POC on their vehicles.
Lagos Ministry of Transportation Permanent Secretary, Abdulhafiz Toriola, disclosed the tax in June, explaining POC would help vehicle owners and the government ensure the integrity of vehicles registered on the National Vehicle and Identification Scheme (NVIS) database as well as track and recover stolen vehicles.
“To this end, the Federal Government has introduced the issuance of annual Proof of Ownership Certificate for all registered vehicles,” he said.
National Bureau of Statistics (NBS) data shows there were 11.76 million vehicles in Nigeria in the second quarter of 2018 (Q2 2018).
A total 192,287 vehicles were imported through the Ports & Terminal Multipurpose Limited in the first 10 months of 2021 (M10 2021), but only 114,159 came through terminal in M10 2022.
Toriola said POC will serve as official documentation for a vehicle’s legal ownership, as it “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.”
He explained that “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.”
Toriola said Lagos would begin collection of POC tax from 1 July 2023, but other states are yet to make their positions known.
Negative impact of additional tax on citizens
Mixed reactions have trailed the additional tax imposed on citizens already enduring a lot of hardship without hope the levy will help improve their lives, and not stolen by government officials.
Taiwo Oyedele, Fiscal Policy Partner and Africa Tax Leader at PwC, said the POC tax is retrogressive, 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,” he argued in a LinkedIn post.
“While this tax will not necessarily stop the earth from rotating, it is wrong both in terms of signalling 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 said the tax should be set aside in the interest of good order and to prevent setting a bad precedent.