TAXI and car hire fares across Lagos State are going to rise significantly after the government increased taxes in the sector by 10% to enable it recover some of the losses incurred as a result of the coronavirus lockdown.
Over recent years, car and motorcycle taxi services have boomed in the Lagos metropolis due to the absence of a mass transit service like a metro or tube network. Services such as Uber and Bolt have enjoyed huge patronage as they are the only means through which a lot of people get about the city.
Due to the Covid-19 lockdown, which hurt industrial output across the state and the increased expenditure the government had to incur to combat the virus, the Lagos State government has decided to increase the taxes these services pay. Two weeks ago, Governor Babajide Sanwoolu increased the fares on the state-owned Lagbus bus service by 46%.
According to the governor, the new regulation for e-hailing taxing services is set to come into effect on August 20. Details of the increased were contained a document titled Guidelines for Online Hailing Business Operation of Taxi in Lagos State 2020, recently issued by the Lagos State Ministry of Transportation.
According to Part 4.1 subsection 5 of the document titled e-Hailing Taxi Operation, all drivers must pay 10% generated on every trip to the Lagos State government. It read: “All operators of e-hailing taxi service must pay the state government 10 per cent service tax on each transaction paid by passengers to the operators.”
This new policy also mandates all e-hailing taxi firms to pay N25m yearly to the state government per 1,001 vehicles for an operational licence while they will pay N10m yearly for renewal on every 1, 001 cars in their pool. New firms would also pay a N10m provisional fee to the state government before starting operations.
This implies that the state government will collect taxes, licensing fees and then a percentage from every trip completed on these platforms. In addition, the Lagos State government also makes it compulsory for all ride-hailing services to make their database accessible to the government.
One analyst said: “While operators kick against this provision, if it goes ahead to be implemented on August 20, the real losers will be the customers. Uber and Bolt will pass this 10% cost along to end-users, making cab fares more expensive.”
This new policy comes barely months after motorcycle-hailing services like Gokada, MaxNG and O’Ride were forced to stop operations following a policy introduced by the Sanwoolu administration which cost investors millions of dollars in investment. Lagos State government has been accused of high levies and double taxation which has often affected including start-up businesses.
Many unemployed Nigerian graduates have been forced to go into taxi-hailing businesses because of the high rate of unemployment, which is expected to increase due to the economic crunch caused by the Covid-19 pandemic.