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Fashola Signs Law To Impose 5% Tax On Goods, Services In Hotels, Event Centres

Jun 22, 2009 - Lagos State Governor, Mr Babatunde Fashola (SAN) on Monday signed into law a bill to impose a five percent consumption tax on all goods and services consumed in hotels, restaurants and events centres within the state with an assertion that the new law exempts all those who comply from paying the Sales tax.

According to Governor Fashola who spoke at the Conference Room of the Lagos House, Ikeja, the new law also exempts the operators of traditional and customary eating places popularly called bukas.

He added that the enactment of the law is a response to the complaints of double taxation which recurred during the administration of Asiwaju Bola Tinubu as well as during the Governorship election campaigns in Lagos and the inception of the present administration.

Governor Fashola explained that the new law also seeks to promote and develop some of the good practices that usually take place in some of distant jurisdictions and which people here are ready to always use in comparing the country.

Said he: “We have always decried the relative level of development and compared ourselves with the progress made in other jurisdiction without asking ourselves what prices those jurisdictions have had to pay for the level of their development”.

“This law seeks to promote, develop and do some of those things that are done in those other jurisdiction by which standards we are measured. No event place that I got to overseas that do not demand this tax. All patrons of such places have to pay. All those who access hospitality outfits across the world do pay”.

Governor Fashola added that during his recent trip to South Africa, he took note of how much he was levied and that it was very substantial.

The Governor, who described the Lagos business environment as one of the most attractive when a comparative analysis of Europe and West Africa is done, added that the highest income tax in Lagos is 25 percent but the same tax is as high as 43percent in some other jurisdictions.

He added that the new tax is a guarantee of good life that allow the Government to perform its role well adding that the beauty of the new law is that people will only pay when they make use of the service.

Said he: “For those in the hospitality sector, it is an opportunity to share in the commonwealth and enable us to ensure a further sustenance of security that will secure the events and help in increasing capacity to deliver on infrastructure like roads and water supply because the event centres cannot be viable if infrastructure is absent”.

“Today, I am a beneficiary and a victim of one of them as sometimes I don’t sleep when they play very loud music, but after the event it is our responsibility to clear the drinks, food, baggage and refuse. We need money for this. This is why we are asking the event places to lend us a hand by giving a part of the revenue they collect so that we can put it to good use”, Governor Fashola added.

The Lagos State helmsman also said “there is no equity in that tax where somebody takes everything and goes away”.

Speaking earlier, the Special Adviser to the Governor on Political and Legislative Matters, Hon AbdulLateef AbdulHakeem said the new law has 18 sections and that Section one imposes tax on any person who pays for the possession of any consumable goods and services in any Hotel or Restaurant and Event centre.

He explained that consumers under the law mean guests at the hotels and whoever purchases any consumable goods and services within any hotel or outside the hotel, explaining that hotels will include motels, restaurants and apartment for short term letting and other guest houses whether subscribed as an hotel or not.

He added that the rate of the tax which is consumption and residual tax is five percent.

Hon Abdul Hakeem explained that under Section 17, Event Centres include halls, auditoriums and open spaces and all public places designated for a fee or food joints.

He added that operators of the hotels and guest houses would serve as collecting agents and would be administered by the Lagos Internal Revenue Service (LIRS).

“Every operator must understand that from 30 days after the date of the commencement of the operation of the law or 30 days after the commencement of official business by such hospitality outfit (whichever comes first), all such hotels must register with LIRS”, Hon Abdul Hakeem said.

He said before any government agency, Parastatal or Local Governments enter into any contract with any event centre or hospitality outfit, it must show proof of registration with LIRS.

The Special Adviser added that: “Any manager or director of hotel who fails to abide by provision of the new law would be liable upon conviction to two years imprisonment or a fine of Two Million Naira or both”.

He added that the new law would also bring relief, development, comfort and tourists to the State by enhancing security and mass employment for the people.

The event was witnessed by the Special Adviser on Taxation, Mr Ade Ipaiye and other members of the State Executive Council, the Executive, the Executive Chairman of the Lagos Internal Revenue Service (LIRS) and other management team members.