President Bola Ahmed Tinubu has approved aviation revenue deductions from their Internally Generated Revenue (IGR), lowering it from 50% to 20%. This decision follows a planned protest on August 21 and the Minister of Aviation’s appeal for calm, assuring the public that the government is addressing the issue.
This downward review, according to a unionist, is a show of good faith and helps meet industry aspirations
Historical Perspective:
This policy originated under former President Muhammed Buhari, who initially set the IGR deductions at 25%. In October 2022, the Finance Act increased the deductions to 40%. However, in January 2024, the federal government directed the Office of the Accountant General to enforce a 50% deduction. This applied to the IGRs of Federal Government-Owned Enterprises, including the aviation industry, despite protests urging a review of the 40% increase.
The industry has expressed concerns about these aviation revenue deductions. The International Civil Aviation Organization (ICAO) emphasises the need to reinvest revenue generated by the aviation industry back into its development. Agencies and unions have called for exemption from these deductions, aligning with ICAO’s recommendation.
ICAO Standards:
ICAO’s Standard and Recommended Practices (SARPs), particularly Doc 9562 on airport generation, emphasize that airports must transparently reinvest generated revenue entirely into operating and developing their facilities. The deductions also contradict ICAO Document 1982, which outlines that charges imposed on aviation organizations should aim to recover costs, not generate profits.
An anonymous source said aviation revenue deductions have been happening across all government funded agencies since inception. He explained it is the government’s way of raising funds worldwide, a form of taxation not exclusive to Nigeria.
He however said, “ For agencies generating their own revenue without relying on federal funding, exceptions have been made in some cases. Aviation agencies, such as FAAN, NAMA, and NCAA, generate their revenue, praying for similar exemptions. ICAO regulations require these exemptions for the aviation industry to fully comply with international standards.”
