Aviation Leader Criticizes New Tax Law, Calls for Willingness to Pay
In a recent interview, Professor Obiora Okonkwo, the spokesperson for the Airline Operators of Nigeria (AON) and chairman of United Nigeria Airlines, shared his insights on the economic challenges facing the aviation sector, with a particular focus on the new tax law. He emphasized that tax collection is more effective when there is a willingness to pay, driven by transparency and government accountability.
Assessment of 2025 and Economic Turbulence
Professor Okonkwo described 2025 as a year of mixed developments, marked by both positive and negative outcomes. He noted that the year was foundational for setting goals, despite obstacles such as COVID-19 disruptions, exchange rate instability, and inconsistent government policies that created economic turbulence. However, he highlighted a recent stabilization in exchange rates, which has allowed airlines like United Nigeria Airlines to expand their fleets and plan for growth in 2026.
Concerns Over the New Tax Law
The professor expressed serious concerns about the new tax law, describing its implementation as draconian and intimidating. He argued that the law's provisions, such as asset seizure and rapid property sales, are excessive and could hinder compliance. Okonkwo stressed the need for extensive sensitization efforts, not just through verbal communication but by demonstrating how tax revenues are used transparently to benefit the public.
He pointed out that many Nigerians question the purpose of paying taxes when they often provide their own infrastructure, such as roads and electricity. Government presence must be felt in people's lives to gain their buy-in for taxation, he asserted, rather than relying on forceful measures that he likened to gangsterism.
Aviation-Specific Issues and VAT Concerns
For the aviation sector, Okonkwo highlighted discrepancies between the written tax law and interpretations by tax authorities. A key issue is the 7.5% Value Added Tax (VAT) on aircraft purchases, which he argued is burdensome, especially when combined with high borrowing costs. He questioned the logic of paying VAT upfront with the promise of later refunds, noting that claiming refunds from the government is often impractical.
He called for a review of these policies, emphasizing that aviation is a critical sector that should not be overburdened with taxes that could stifle growth and innovation.
Impact of Fuel Subsidy Removal and Dangote Refinery
Discussing the removal of fuel subsidy, Okonkwo praised the Dangote Refinery for its positive impact on the economy and aviation fuel supply. He noted that the refinery has helped stabilize fuel costs and expressed surprise at any antagonism towards it. The AON has engaged with Dangote to explore ways to further reduce energy costs, showing a collaborative approach to addressing operational challenges.
Exchange Rate Stability and Operational Costs
Okonkwo acknowledged that the recent stability in the naira exchange rate has aided planning and strategy for airlines. However, he warned that operational costs, including aviation fuel, must be reflected in ticket pricing to ensure sustainability. He explained that airlines face significant expenses, such as fueling aircraft for round trips, and must price services accordingly to remain in business.
Passenger Behavior and Industry Challenges
The professor addressed issues of passenger behavior at airports, noting that Nigerian airlines often go beyond international standards to accommodate travelers, such as providing hotel stays during delays. He expressed frustration with uncivilized reactions from passengers, especially during peak seasons like Christmas, and stated that the industry will enforce rules more strictly in 2026 to protect staff and operations.
Role of Technology and Infrastructure
On technology, Okonkwo assured that Nigerian airlines are up-to-date with global innovations, using state-of-the-art aircraft and systems. However, he highlighted a gap in ground support infrastructure at airports, which can lead to delays and passenger dissatisfaction. He called for improvements in airport facilities to match the advanced capabilities of modern aircraft.
Conclusion and Future Outlook
In summary, Professor Okonkwo urged the government to foster a tax environment based on transparency and mutual benefit, rather than coercion. He emphasized the aviation sector's vital role in Nigeria's economy and called for supportive policies to ensure its growth and contribution to national development.
