FG Right to Ask Banks for Windfall Levy, Says University Don

The federal government is justified to ask banks to pay a one-off windfall levy on the profits made through the foreign exchange transactions, a Professor of Economic History at the Obafemi Awolowo University, Ile Ife, Adetunji Ogunyemi, has said.

Ogunyemi in an interview with newsmen, said the levy would aid government to achieve economic stabilisation through ensuring that a resource-deficient sector benefits from a resource-surplus sector.

“It is perfectly in order to amend the Finance Act 2020 in order to accommodate the collection of this one-off levy on the windfall profits of banks on their foreign exchange transactions in the last one year.

“It is part of the duties of the government to stabilise the economy and redistribute wealth. The windfall levy is a patriotic call made on the banks to contribute to the system. The banks should not see it as a tax. After all, it is a one-off levy.

“At any rate, why are the banks trying to shy away from their responsibility of contributing to the system? Their wealth comes from the commonwealth of Nigeria. Is that not?

“If your wealth comes from the commonwealth of a country and that country is in dire straits and it calls upon you to pay a levy on profits arising from your unpredicted income, I don’t think that it is out of place for them to obey such call to help fatherland. 

“In 1929 up to 1932, there were decisions made in the United States under President Herbert Hoover to stabilise the economy by ensuring that government deliberately pumps into the economy huge expenditure financed under public-private partnership arrangement.

“Nigeria is in such a situation now as the United States was under Hoover. So, it is not out of place to request that banks that have made unplanned, spontaneous, unpredicted, sudden income to donate to the system a portion of their profits.

“This levy is actually on their windfall which is not part of their projections in their respective budgets. So, there is nothing that is malicious about this levy. After all, the levy is not for the benefit of persons. It is for the benefit of the public and it is in order,” he said.

The don, however, cautioned that the revenue from the windfall tax should not be spent on recurrent items, but deployed to fund critical infrastructural projects such as the Sokoto-Badagry Highway, the Lagos-Calabar coastal highway and rail projects.

“I would advise that the government uses the revenue to fund critical projects such as the Lagos-Calabar Coastal road, the Sokoto-Badagry Highway, Port Harcourt-Maiduguri rail line, expansion of the standard gauge from Ibadan to Abuja and then onward to Kaduna.

“These are the critical projects that will create a trickle-down effect on the economy to jumpstart it from its doldrums and provoke productive enterprises among business concerns.

“It can also be used for industrial development through the Bank of Industry or specifically for some agricultural projects such as dam development and so on,” he added.