CONTROVERSY has continued to trail the policy of the Federal Government, which increased deduction from revenue generated by agencies and payable into the federation account from 25 percent to 40 percent.
Key players across the aviation sector kicked against the policy which the government made compulsory and payable into the Treasury Single Account (TSA).
Calling for exemption of the aviation agencies from the policy, the key players argued that it contradicted the recommended practices of the International Civil Aviation Organisation (ICAO), which stipulate that revenues generated in the sector should be ploughed back into it for the provision of enhanced infrastructure.
The agencies, at different fora, had declared that the policy was ‘strangulating’ their activities, as it deprived them of embarking on major infrastructure and critical projects that would put the industry at par with its counterparts elsewhere.
Speaking on the development, Managing Director of the Nigerian Airspace Management Agency (NAMA), Mr Tayib Odunowo, lamented how the 40 percent contribution to the TSA was hindering the growth of the sector.
According to Odunowo, NAMA, for instance, was, in 2022, removed from the 2023 budget, which indicated that it must be self-sustaining and be responsible for its entire projects without government’s intervention.
Odunowo, who said the sector is still at the ‘incubation stage’ and needed government support to stabilise and grow, stated that unlike in other sectors where some of the equipment do not require optimal performance, the reverse is the case in aviation, where its critical infrastructure must be top-notch for safety purposes.
“We want to grow and we need to grow our industry. We are still in the incubation stage and we need that support from the government. So, we plead with the government to remove us from the TSA. That is what we have been agitating for. This 40 percent deduction is strangulating us.
“For instance, if you go to some states of the federation, ordinary streetlights are not put on again, but can we afford to do that in the sky? So, the government really needs to come to our aid,” Odunowo added.
Corroborating the position of the NAMA MD, Mr HamzatBalogun, Director of Finance and Administration in the agency, said the removal of the agency and others in the sector from the TSA would enable them to manage their resources the best way possible.
Already, he said NAMA, for instance, remits withholding tax, stamp duty and others to the government regularly, wondering why it should still contribute to the TSA.
An aviation lawyer, Mr PekunSowole, in his position, called for the immediate stoppage of the 40 percent deduction from the aviation agencies on the premise that they require serious funding for expansion projects.
He expressed doubts if the agencies’ accounts are audited by the government to know their financial status.
According to Sowole: “This has to stop. If it were 40 per cent of the profit the agencies make, after all expenses have been deducted, it is still wrong because there should be sinking funds for expansion projects. The problem with the agencies and the Federal government is that no audit of the accounts is carried out and if it is, it is done in secret, meanwhile it ought to be transparent and be in the public domain.”
Sowole who insisted that the 40 per cent deduction by the government was having a ripple effect on air tickets and warned that with such charges and taxes, the government was signalling the death of indigenous carriers, declared: “The effect of these policies is the multiple taxes on air tickets and why the fares in Nigeria are so expensive. The Federal Airports Authority of Nigeria (FAAN), takes 5 per cent Passenger Service Charge (PSC), the Nigeria Civil Aviation Authority (NCAA), takes 5 per cent Ticket Sales Charge (TSC) of both international and domestic tickets.
“There are a myriad of other charges and taxes. How will the airlines survive in the face of these charges? Government is signalling the death of the airlines.”
For the managing director, Centurion Aviation Security, Group Captain John Ojikutu, retired, the 40 per cent contributions of the agencies to the TSA was in order inasmuch as it would be available for aviation infrastructure development.
Ojikutu said in a bid to ensure the survival of the agencies, that the Nigeria Civil Aviation Authority (NCAA) should ensure that the domestic airlines were not indebted to the critical services providers, especially to FAAN and NAMA.
He cautioned that any indebtedness to any of these agencies would lead to reduced service provision and standards, thereby impeding safety and security standards.
The Federal Government had in October 2022, increased the compulsory contribution to federation account by the revenue generating agencies to 40 per cent from the initial 25 per cent, which came into effect barely three years earlier.
The 40 per cent of the Internally Generated Revenues (IGRs) by government agencies according to the policy is sent into the TSA through the Central Bank of Nigeria (CBN).
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