Mixed reactions over FCT entertainment fee
The Federal Capital Territory Administration (FCTA) on Monday announced that recently introduced Entertainment Tax is capable of giving the administration N15 billion revenue.
Entertainment Fee regulation is captured in official gazette, Section 11 Entertainment Act, Cap 498 Laws of the FCT Nigeria, 2007, Section 4 Federal Capital Territory Act Cap. F6 Laws of the Federation, 2004.
But stakeholders in the tourism sector have condemned the policy saying it will cripple hospitality business in FCT.
Government maintains that it needs the tax in order to improve provision of health, education and public transport services.
“We hope to realize N10 billion to N15 billion in the first year. This will grow by about 25 percent in the next five years. It’s one of the major sources of internally generated revenue for the Federal Capital Territory,” the Director of Economic Planning, Research and Statistics, FCTA, Mr Isa Ari told newsmen.
Entertainment Fee is five percent of what is charged on food, drinks in hotels, bars and parks. It also includes five percent of charges on TV and internet access.
For instance, one who pays N10,000 subscription for cable TV will now pay N10,500.
The director explained that “Entertainment Fee is charged on luxury. We must look at it from the point of view of the rich supporting the development of this city and the territory in the interest of the poor.”
This fee according to Ari is not new because cities of the world like Washington DC, London and Dubai use it to keep moving. He said Lagos also collects the fee.
He said less than eight percent of the city population controls 80 percent of the resources. “If there’s no fee to share, how does the 98 percent of the people in the city get the benefit?,” he queried.
He said the administration is involved in collection of taxes which should be exclusive to local councils because the task of maintaining the capital city is beyond the area councils.
The director was hopeful that with the coming of the FCT Board of Internal Revenue this year, FCT administration will expand its revenue base.
Reacting to this, the president of the Federation of Tourism Association of Nigeria (FTAN), Mr Tomi Akingbogun told Daily Trust that investors in the tourism sector were not consulted before introduction of the fee.
He condemned reasons given by FCTA to come up with the fee saying comparing Abuja where many residents hardly earn a dollar a day with cities like Washington DC and London is unrealistic.
Akingbogun said tourism business in Abuja suffers a lull because factors like Ebola disease, political violence scare and terror acts have driven many out of the territory. He said FTAN is making government to see the negative impact the new law will have on the economy.
Similarly, the Group Managing Director of Nanet Group, manager of hotels, fast food, restaurants and contract catering services, Mr Ini Akpabio maintained that the new tax will cripple business.
“We in the hospitality and tourism sector feel that we’re being pursued. There’s too much emphasis on getting so many types of taxes and levies from us.
“The hospitability sector especially hotels, fast food and restaurants, we’re already putting much of our money in the generation of power. Most of us spend huge amount of money acquiring generating sets, a lot of money maintaining them. We spend a lot of money buying diesel. We also had massive increases in electricity bills we pay,” Akpabio lamented.
He said power generation takes up to 20 percent of his business’ total income.
This, added to five percent VAT and five percent Entertainment Fee means he is already taking out 30 percent of his business income. He said this is apart from many other levies that he pays.
“We have many types of levies - Tenement Rate, Environmental Tax etc. the local government has many different types of taxation,” he stated.
He said Nigeria’s hospitality industry still remains one of the most expensive worldwide. Reason: “It’s expensive because there’re so many of these taxes and lack of electricity.”