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Road Tax Revenue Rise Affects Transportation

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By Mercy Kelani

These taxes are collected to finance the country's transport infrastructure.

In Nigeria, rising gas prices are not the only factor contributing to the high cost of transportation. The rise in road taxes collected by state governments is a major contributing element. Road Tax Revenue increased by 63% in 2023, yielding ₦40.14 billion in total receipts, up from ₦24.57 billion in 2022. According to the Internally Generated Revenue (IGR) data from the National Bureau of Statistics, Lagos State collected the most road taxes, totalling ₦16.74 billion, or 41.7% of the total amount collected nationwide.

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Ebonyi State, on the other hand, 7 the most notable rise, with road Tax income soaring from ₦72.95 million in 2022 to ₦2.85 billion in 2023, a 3,804.32% increase. However, the Federal Capital Territory (FCT) failed to disclose any revenue from road taxes for the year. Road taxes are mostly collected by state governments in Nigeria with the goal of financing the upkeep and enhancement of the country’s transport infrastructure, which includes highways, bridges, and traffic control systems. Road safety improvements, new road construction, and road deterioration repairs are frequently funded by the money collected from these levies.

Businesses and individuals are directly impacted by the increase.

However, because of the increasing urbanisation and the sharp rise in car usage, the money raised frequently isn’t enough to cover all of the Infrastructure demands, which forces taxes to rise in order to keep up with demand. In addition to road taxes, additional sources of funding that go towards transportation expenses include levies on commercial transportation services, tolls on highways, and vehicle registration fees. Vehicle registration fees, for instance, make up a sizable portion of internally generated revenue (IGR) in Lagos in addition to road charges.

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According to the National Bureau of Statistics (NBS), Lagos received more than ₦12.58 billion from motor vehicle registration in 2022. Furthermore, tolls on important thoroughfares like the Lekki-Epe Motorway raise the cost of transportation for both private and business travellers. Businesses and individuals are directly impacted by the increase in road charges and other levies. People’s commutes become more expensive due to growing road taxes and transport expenses, which is particularly difficult for those with low incomes.

Transport unions have called for increased accountability.

More so, Road-dependent businesses like commercial drivers and transportation companies have to deal with growing operating expenses. Since the cost of transportation is included in the price of food, consumer goods, and other necessities, these higher costs are typically passed on to customers in the form of higher fares, which further increases Inflationary Pressures on goods and services. In terms of policy, the Nigerian government has defended these tax hikes by arguing that they are required to Finance important infrastructure initiatives.

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Nonetheless, transport organisations, such the National Union of Road Transport Workers (NURTW), have frequently expressed their worries about the unfair treatment of commercial drivers, who are disproportionately affected by these tax increases without witnessing appreciable improvements in the state of the roads. These unions have called for increased accountability and a greater allocation of government funds to road upkeep and driver tax reduction. Taking a broader view, states other than Lagos and Ebonyi also make substantial contributions to road tax collections.

Related Article: Nigeria to Expand Tax Net with New TICC Bill

For example, in 2023, Ogun State collected ₦3.57 billion in road charges, a 24% increase over the previous year. Rivers State, which is well-known for its oil-based economy, brought in ₦2.34 billion from road taxes, highlighting how dependent these governments are on these revenues. The data, however, reveals differences in road Tax Collection across the nation, with some states collecting far less because of inefficient tax collection systems or lower car ownership. These differences show how different residents experience different financial strains based on where they reside.

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