Cybersecurity levy is one tax too many
President Bola Tinubu
NIGERIANS woke up to economic terror on Monday. That day, the Central Bank of Nigeria directed banks to impose a cybersecurity levy of 0.5 per cent on electronic banking transactions. It has grave implications as Nigerians are reeling under the burden of multiple taxes amid severe economic hardship, brought on by the policies of the Bola Tinubu administration.
The levy is provocative, a slap on the face of Nigerians struggling to maintain the little dignity left from enduring policy measures that have crashed the standard of living for most citizens.
The CBN says the levy is backed by the Cybersecurity Act 2024, which mandates banks to collect it on applicable transactions.They are to remit it to the Office of the National Security Adviser. There are 16 exceptions to the law. In a country notorious for sleaze, who monitors the administration of the fund?
It has provoked massive agitation primarily because bank customers are already paying many fees, including transfer fees, stamp duty, ATM card maintenance and SMS charges. These erode the face value of bank transfers.
This adds to the list of impositions by a government desperate to shore up its finances without much concern about the impact on citizens and businesses.
First was President Bola Tinubu’s “fuel subsidy is gone” proclamation on Inauguration Day. This plunged the country into turmoil as petrol prices climbed by 350 per cent. Two weeks later, the administration floated the naira. It triggered an unprecedented devaluation that saw the currency depreciate from N460/$1 to N1,900/$ before it recovered to trade around N1,440/$ on Wednesday.
To solve Nigeria’s perennial power shortages, Tinubu in April removed electricity subsidies to reflect commercial rates such that the Band A customers now pay between N225 per kilowatt hour and N206.8KWh, up from N68KWh.
Amidst this, diesel sells for N1,300 per litre, while petrol sells for up to N1,500pl in the rural areas. The minimum wage is still N30,000 a month.
Essentially, the cybersecurity levy is at variance with Tinubu’s policy to eliminate multiple taxation.
It forces bank customers to take responsibility for what the banks and the government should do, since cybersecurity cuts across areas beyond banking.
The logical thing to do is to look at the report of the Presidential Committee on Fiscal Policy and Tax Reforms, which recommended the adoption of just nine taxes instead of the 62 identified to facilitate easy and voluntary compliance and administration. Sadly, the government is doing the opposite.
While it is normal that the government is seeking ways to raise funds, the cybersecurity levy is ill-timed and inappropriate, especially when the inflation rate has topped 33 per cent as of March, up from 22 per cent a year ago, making nonsense of household incomes.
Many Nigerians question how the existing taxes are utilised as there is barely a connection between taxes collected and public services provided. Last year, the FIRS collected N12.37 trillion in taxes. This year, it has projected N18.41 trillion but Nigerians still have to pay for surgical gloves, water for injection and other consumables at public hospitals; public schools are in a state of disrepair while roads are impassible for most parts.
The Federal Government could rake in between N3 trillion and N7.75 trillion in one year with the cybersecurity levy, according to estimations by the Centre for the Promotion of Private Enterprise, but bank customers, most of whom are ordinary folks should not have their accounts raided to bridge the public deficit.
The levy could affect financial inclusion, at 74 per cent in 2023.
To improve its finances, the government should end crude oil theft in which about 400,000 barrels are lost daily, and cut the huge wastages in expenditure and overheads, including humongous amounts allocated to lawmakers for constituency projects, and needless travels.
