Recent decision of the Federal Capital Territory Authority, FCTA, to introduce leisure or entertainment tax including vat on fish eaten at leisure spots have continued to generate debate among Abuja residents. The policy which has been on the drawing board for years following the advent of Parks and Gardens in the metropolis was reawaken last month by the Director of Economic, Planning, Research and Statistics, Isa Mohammed, while briefing journalists, after FCT executive meeting on the need for leisure tax.
According to him, the administration will soon commence the enforcement of a five percent entertainment tax to be paid by visitors to the gardens or joints to boost the infrastructure development of the territory. He noted that “we are living in a city which is too free. If you go to Wuse 2 to take a ‘point and kill’ of about N5, 000, what you will be parting with will be a token of N250 tax.
“We realised that we are losing N50 million every month; we visited Dubai, Washington DC, nobody is charging less than 10 percent, especially on leisure.”
As tempting as the expected revenue from the propose leisure tax would entice, caution must be taken not to jeopardise the city’s entertainment industry, night life and thriving small fish businesses.
It will not be wise for instance to rely on none existence legal framework or ministerial order to enforce tax on residents, a financial consultant, Simon Adeyemi told the Nigerian Pilot Metro.
He said that the claim by the Director of Economic, Planning, Research and Statistics, Isa Mohammed that “there are laws governing entertainment tax in the Federal Capital Territory as if it were a state” was an exaggerations of the existence of a legal framework for such types of tax. It will be ridiculous to hide under the euphoria of the legal victory on parks and gardens and assumed that the administration can rely on ambiguous legal clauses to introduce any kind of tax.
According to Adeyemi, the FCTA has several alternate avenues opened to it from which it could raise revenue for infrastructure development without distorting small businesses. A huge revenue potential that could bring down the sky rocket house rents remains the unsolved property tax. It should be addressed. Unfortunately, since the FCT Property Tax and the FCT Internal Revenue Service Bill passed through second reading at the Senate, nothing has been heard of it. Apart from other metropolitan developmental issues which it seeks to address, it would boost the territory revenue drive; release thousands of unoccupied mansions dotting the landscape of Abuja.
Several residents who spoke to Nigerian Pilot Metro on these issues are of the view that the administration should put its emphasis on the property development bill and ensure it passage into law by the National Assembly.
The strong objection raised by the Federal Inland Revenue Service to the passage of that bill should not deter the National Assembly and Federal Capital Territory from ensuring that the property bill becomes an Act. After all, FIRS also suggested amendments of related acts that would pave way for its smooth passage.
Also to be taken into consideration in pursuing the entertainment tax is the complaint of FIRS representative, Mr. Osy Chuke at the National Assembly public hearing that the introduction of additional tax be suspended until such a time that the Nigerian tax system can support the introduction of the new tax.”
However, for thousands who are rich and who patronise ‘point and kill’ leisure joints for fish, the tax may not be of any problem to their chosen pastime.
But an operator of fish joint in a Garden in Wuse Zone 6, Abuja; Margret Adamu said that payment of vat on fish will harm her business because it will affect patronage and reduce her income. She admits it will open up job opportunity for those to be engaged to enforce the tax payment but added that it will also entail huge cost to station FCT personnel in all the joints dotted across the metropolis.