THE CONTROVERSIAL CYBERSECURITY TAX
The cybersecurity tax is one too many
At a time many Nigerians are experiencing intense economic distress, the Central Bank of Nigeria (CBN) has directed the banks to impose a 0.5 per cent tax on electronic transactions, otherwise known as Cybersecurity Tax, with effect from next Monday. The new levy, if implemented, will compound the woes of many Nigerians.
According to the CBN, the tax is part of efforts to contain rising threat of cybercrime in the financial system with the deducted funds to be remitted to the National Cybersecurity Fund (NCF), which shall be administered by the Office of the National Security Adviser (ONSA).
The implementation of the levy, the CBN further explained, followed the enactment of the Cybercrime (Prohibition, Prevention, etc.) (amendment) Act 2024, and was pursuant to the provisions of Section 44 (2)(a) of the Act.
As expected, the new tax has been greeted with angst across the land, with many questioning the economic justification and the rational of another burden on an already beleaguered populace overwhelmed by a multiplicity of taxes. The Nigerian Economic Summit Group (NESG) has described the idea as ill-timed, given that the “impacts of the fuel subsidy removal, exchange rate reform, and, most recently, the removal of electricity subsidies still permeate the operating costs of businesses and citizens’ welfare.” It warned that the government “must be cautious of the numerous strenuous policies that stiffen the purchasing power and welfare of corporations and individuals.”
As argued by many experts, the cybersecurity levy carries the downside risk of discouraging financial intermediation as well as complicating the transmission of monetary policy, with more people shunning the banks due to high charges. The result is that it would make all the efforts to tame inflation difficult.
There are also pertinent questions that deserve answers. Are customers supposed to fund expenses and responsibilities of banks? When has it become the business of the government to watch over the operations of banks vis-a-vis cyberspace? What makes the controversial levy even more nebulous is how the CBN that is championing a cashless policy and financial inclusion is at the same time promoting an agenda that is antithetical to its realisation. It is incomprehensible how an apex bank that is pushing for e-banking is in the same breath moving to charge for every transaction, including cash deposits.
Regardless of the legality or justification the authorities might advance for the levy, it makes no sense introducing another tax at this time, under any guise. This is particularly so since the Taiwo Oyedele Presidential Committee on Fiscal Policy and Tax Reforms whose mandate includes streamlining multiple taxes and levies currently inhibiting the growth of businesses in Nigeria, is yet to submit its recommendations. Worse still, it comes on the heels of other charges incurred on the transaction, like value added tax (VAT), stamp duty charges on mortgage-backed loans and bonds by the federal government, etc. These levies only serve to deepen the financial burden on citizens already grappling with economic challenges. President Bola Tinubu must be concerned that Nigerians are getting increasingly agitated that his administration is heaping too much burden on the poor. Many have not only questioned the rational for the proposed levy, but also why 40 per cent of its proceeds should be domiciled in an office (within the presidency). We therefore align with the position of several individuals, organisations and members of the House of Representatives who have called for the suspension of this offensive levy. It is an unnecessary extra weight on a beleaguered citizenry, and it is important for the CBN, and by extension, the federal government to w ithdraw the circular and halt its implementation.
