The Babajide Sanwo-Olu led Lagos State government is set to tax ride hailing businesses like Uber and Bolt some more--a move that will lead to a hike in fares for the end user.

The new regulation for ride hailing services will take effect from August 20, 2020.

In a document titled, ‘Guidelines for Online Hailing Business Operation of Taxi in Lagos State 2020’ issued by the Lagos State Ministry of Transportation, “e-hailing Taxi Operation’, all drivers must pay 10 per cent generated on every trip to the Lagos State Government.”

This is contained in Part 4.1, Subsection 5 of the document.

“All operators of e-hailing taxi service must pay the state government 10 percent service tax on each transaction paid by passengers to the operators,” the document partly reads.

Lagos is Nigeria's commercial capital and most populous city [pamelawatson]
Lagos is Nigeria's commercial capital and most populous city [pamelawatson]

The contentious policy also mandates all e-hailing taxi firms to pay N25 million annually to the state government per 1,001 vehicles for an operational licence.

They are also expected to pay N10 million annually for renewal on every 1, 001 cars in their pool.

New firms will also pay a N10 million provisional fee to the state government before the commencement of operations.

Push back from operators

This implies that the state government will collect taxes, licensing fees and then a percentage from every trip completed on these platforms.

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 per cent cost along to end-users, making cab fares more expensive,” TechCabal writes.

The state government also makes it compulsory for all ride hailing services to make their database accessible to the government, reports say

The new policy comes just months after the Lagos state government banned motorcycle-hailing companies like Gokada, MaxNG and O’Ride from operating in the city center. The move led to job losses on an unprecedented scale.

The Lagos state government has been bashed online all week long for "multiple taxes and for making life even more difficult for everyone in the middle of a global COVID-19 pandemic."

The Lagos state government is yet to officially respond to the online outrage. However, a highly placed source in the corridors of power in the state tells Pulse “that the conversation with the ride hailing business executives has been on for over 5 months. Long before the pandemic.

"Lagos state wants to know the number of vehicles on the platforms of the e-hailing services. The e-hailing guys say they can’t expose their database to the government. This is an issue that borders on the security of the state and this is what this is all about.

“How will Lagos charge you if they don’t know the number of cars within your purview? Why are you afraid of letting the state know the number of vehicles on your platform? This is what this is all about. We will address the issue publicly soon enough. We will sit down again with the business executives of the ride hailing firms and find a compromise that works for everyone,” our source says.

Lagos is Nigeria’s most populous city and commercial capital. It is also the epicenter of the COVID-19 outbreak in Africa’s largest economy.