Home Tourism Hotel consumption tax: FG gives state government leeway to expand revenue

Hotel consumption tax: FG gives state government leeway to expand revenue



Reprieve has finally come the way of owners of hotels and restaurants in the country, as the Federal Government through the Federal Ministry of Finance, has ceded the controversial consumption tax to states government as a form of latitude to drive more internally generated revenue. This was contained in the official gazette obtain from the Ministry of Finance yesterday.

This followed the July 19, 2013, judgment of Supreme court which gives state House of Assembly the autonomy to make law and regulate tourism, licensing and grading of hotels and enact the Hotel Licensing Law Cap H. 6, Laws of Lagos State of Nigeria 2003; The Hotel Occupancy and Restaurant Consumption Law No 30, Vol. 42, Lagos State of Nigeria Official Gazette 2009 and The Hotel Licensing (Amendment) Law No. 23, Vol. 43 Lagos State official Gazette, July 2010.

The controversial hotel, restaurant or event center consumption tax, hotel occupancy and restaurant consumption law, which has now been gazetted imposes the tax on any person, corporate or otherwise who pays for the use or possession of any hotel, event centre in every state of the federation.

The  official gazette issued in May 2015 by Mrs. NgoziOkonjo-Iweala, former Minister of Finance, shows that the ministry in the part 2 of item 13 granted the state government the autonomy to receive consumption tax on hotel, restaurant or event centre, this has however became effective from 26 May 2015.

According to Mr. TaiwoOyedele, Tax and Regulatory Services Unit, Price Water Cooper, the gazette eases the tension on the hoteliers. He noted that there are constitutional and administrative issues arising from the amendment to the schedule which needed to be addressed. He however revealed  the minister cannot by order impose or enact tax laws, adding that taxes or levies introduced by the amendment must be duly enacted by the relevant law making authorities in order for them to have effect.

Mr. JamiuTalabi, Secretary, Lagos Hoteliers Association, commended the gesture of the Federal Government in streamlining the taxes and levies, which had always been duplicated by the various arms of the executive. He however revealed that the gazette has not been officially made available to the association. He however urged the state government to harmonise all this various taxes and levies affecting the operations of hoteliers in the state.

An investment analyst, MrBunmi Martins, however noted that the Hotel Occupancy and Restaurant Consumption Law is consumption, which imposes a 5% charge on goods and services obtained in hotels and restaurants. According to him, the tax is a means through which the state governments can now get leisure consumers to contribute to tourism development, infrastructure upgrade, safety and security. He also noted that the new development has removed double taxation that often occurs when the same tax authority from the state and the Federal government imposes two charges on the same transaction for the same reason.