Motorists to pay fuel levy, road licence fees as revenues fall

In a proposed piece of legislation before the Senate, the Federal Government is seeking to make citizens begin to pay some road user-related charges like fuel levies and road licence fees, in a desperate move to shore up already low revenues.

The bill titled National Road Funds Bill 2015, also intends to get citizens to pay road tolls (toll gates), axle load fines, international transit fees as sources of financing the maintenance and rehabilitation of federal roads. The bill was sponsored by Kabiru Gaya (APC, Kano South).

Already, the N50 stamp duty and Current Account Maintenance (CAM) fee, which would also make citizens cough up more cash to government as they engage in banking transactions was also announced last week by the Central Bank of Nigeria (CBN).

It was gathered that the latest proposed bill is aimed at providing alternative sources of maintaining federal roads, rather than relying solely on government.

The document obtained by BusinessDay, indicated that a fund to be known as the National Roads Fund will be established. This, the bill proposes, will be a repository for revenues accruing for road user charges and other sources for the maintenance and rehabilitation of national roads.

According to the bill, sources of the Roads Fund will include five percent user’s charge on pump price of petrol and diesel received from petroleum products to meet the routine road maintenance needs.

Other sources of financing the Fund, as prescribed in Section 16 of the bill, include international transit fees collected from ‘vehicles conveying goods from outside of the country to a destination inside of the country’; road tolls, with exception of concession agreement; grants; voluntary contributions; earnings from investments and interests accruing from monies of the Fund deposited in banks, amongst others. 

While the Roads Fund will be managed by a Board, the bill also provides that the Roads Fund will be applied for routine and periodic maintenance of national roads; road safety activities including erection of road signs and related road equipment; operational and administrative expenses of the Fund, as well as research, studies, training and dissemination activities associated with road works.

With dwindling oil prices in the international market and the fall of the naira against the US dollar, lawmakers at the budget debate, had advocated tax increase to shore up government revenue. 

This, they said, is to fund the N2.2trillion budget deficit.

Increasing Value Added Tax (VAT) from 5 percent, among the world’s lowest VAT rates, and broadening the tax base were among suggestions put forward by the Managing Director, International Monetary Fund (IMF), Christine Lagarde, during a visit to Nigeria this month.

Vice President Yemi Osinbajo, had disclosed that the government is considering changes to the tax regime as part of efforts to overcome the economic downturn in Africa’s biggest economy due to the fall in oil prices.

The sharp drop in crude revenues, which provide 95 percent of the country’s foreign earnings, has led to the naira hitting record lows on the parallel market, as foreign exchange reserves dwindle. Nigeria is Africa’s top oil producer.

Crude prices have fallen in the last few days to their lowest levels since 2003, at just over $27 a barrel.

The 2016 budget assumes an oil price of $38 per barrel and exchange rate of N197 to $1.

The naira, which has been hit by the foreign exchange scarcity, fell to a record low of N305 per dollar on the parallel market last week, as against the official rate of N197 to $1.

Finance Minister, Kemi Adeosun has said Nigeria plans to borrow up to $5 billion from multiple sources, including the Eurobond market, to plug its budget deficit, while Osinbajo said changes to taxation were also being considered.

“We are looking at increasing our tax coverage,” Osinbajo said at the World Economic Forum in Davos, Switzerland.

He added: “VAT, for instance – we have been doing just about 20 percent coverage. We think that just by increasing coverage, we could do much more and so we could earn more in terms of local resources”.

OWEDE AGBAJILEKE