The N1,000 Proof of Ownership Certificate verification charge that drivers must pay is expected to bring in almost N12 billion for the federal government each year.
Abdulhafiz Toriola, the Lagos Ministry of Transportation’s Permanent Secretary, revealed this last week. He said that by providing this certificate, car owners and the government would be able to monitor car theft and the recovery of stolen vehicles, as well as ensure the integrity of all vehicles listed on the National Vehicle and Identification Scheme database.
He said, “To this end, the Federal Government has introduced the issuance of annual Proof of Ownership Certificate for all registered vehicles.”
In Nigeria, there were 11.76 million automobiles as of Q2 2018, and the vehicle to population ratio for the quarter was 0.06, according to the National Bureau of Statistics (NBS). Nigeria imports roughly 400,000 automobiles yearly, according to various statistics.
In the first ten months of 2021, 192,287 automobiles were brought into the nation through the Ports & Terminal Multipurpose Limited, but just 114,159 vehicles did so in the same time of 2022.
The Proof of Ownership Certificate, according to Toriola, will be used as formal proof of a vehicle’s ownership. “The POC will contain vital information, including the vehicle’s registration details, such as license plate number, model, and year of manufacture in addition to the owner’s name and contact information,” he added.
“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.”
He added that Lagos would begin collection of POC fees from the beginning of July. Other states are yet to make their positions known yet. Mixed reactions have trailed this move by the government, and the Fiscal Policy Partner and Africa Tax Leader at PwC, Taiwo Oyedele, has stated that the tax is retrogressive, ill-conceived, and poorly designed.
He said, in a LinkedIn post, “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 noted that the tax adds complications to the myriad of multiple taxes which make doing business difficult and dampens tax morale.
He added, “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 further stated that the tax should be set aside in the interest of good order and to prevent setting a bad precedence.
