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Private jet owners to pay luxury tax

By on April 24, 2013

The Federal Government is planning to impose a form of luxury tax on owners and operators of private jets in the country, top officials of the Ministry of Aviation have confirmed.

The plan, currently being fine-tuned by the Aviation Reform Committee, which is also looking into certain areas of the aviation sector, will be perfected very soon.

According to the top government officials close to the move, the plan to impose the luxury tax will be preceded by the new general aviation policy, which is currently being drafted by the government.

Ahead of the release of the general aviation policy, the Aviation ministry has reviewed the 2006 Civil Aviation Act, which will lead to the promulgation of a new Act.

It was learnt that the ministry was planning to send the draft Civil Aviation Bill to the National Assembly.

However, the ministry is currently taking the draft bill to some stakeholders for their input and comments.

In the proposed general aviation policy, the government is also planning to stop private jet owners from making use of the Air Operators Certificate. An AOC is a permit that allows aircraft owners and operators to do commercial flights.

Government, it was gathered, reasoned that since private jets owners did not operate commercial flights, it was needless to continue to require them to possess the AOC.

However, sources close to the situation said the proposal to exempt the private jet owners from possessing the AOC before they could be permitted to fly under the policy would be followed up with the introduction of the luxury tax.

A source privy to the plan explained that the luxury tax on all private jet owners. “is patterned after what is in operation in Brazil and most European countries.”

The source said, “You know the government is exempting private jet owners from possessing AOC in the proposed general aviation policy that will be unveiled very soon. As soon as this is implemented, the government will start asking all private jets to pay the luxury tax.”

The official added, “The idea is that since chartered aircraft operators and regular commercial airlines are already paying ticket sales tax and passenger service tax to the government, private jet owners should also pay a form of tax, which most countries of the world called luxury tax. The plan to exempt private jet owners from possessing an AOC before they can fly is just part of the whole policy proposal.

“All these foreign private jets coming into the country must either come under an AOC and be mandated to pay ticket sales charge and passenger service charge, or you stay under private category and pay luxury tax. Once you are flying within the country for some time, you must fall in one of the categories.”

When contacted, the Special Assistant (Media) to the Minister of Aviation, Mr. Joe Obi, said there was the need to wait for the government to unveil the new general aviation policy.

In a text message response sent to our correspondent, Obi said, “Let’s wait for the new policy to be released first.”

If the government implements the luxury tax policy, popular business moguls, bank executives and religious leaders who own private jets will be mandated to pay the tax.

They are the President of Dangote Group, Alhaji Aliko Dangote; Chairman, Globacom, Dr. Mike Adenuga; Chairman, Zenon Oil, Mr. Femi Otedola; General Overseer, Redeemed Christian Church of God, Pastor Enoch Adeboye; and General Overseer, Living Faith World Outreach, Bishop David Oyedepo.

The government had suspended the importation of private jets for some months now, owing to the new general aviation policy being put together by the Aviation ministry.

Top ministry officials said the new policy had been completed, except for some legal details relating to the Civil Aviation Act, 2006.

Private jet ownership in Nigeria grew by 650 per cent from 20 in 2007 to over 150 jets in 2012.

Some wealthy Nigerians had acquired at least 130 private jets with a sum of N1.02tn ($6.5bn) in the last five years, it was gathered.

Some stakeholders, however, reasoned that the new general aviation policy was part of government’s plans to grow Nigeria’s private jet sector, apart from building more private jet terminals at various airports across the country.