Despite President Bola Tinubu’s reported suspension of the implementation of the controversial cybersecurity levy pending its review, we urge the government to shelve the ill-timed and insensitive tax. If the cybersecurity levy is allowed, it will increase the economic hardship of millions of Nigerians. The House of Representatives had last week advised the government to halt the implementation of the 0.5 per cent cybersecurity levy imposed by Central Bank of Nigeria (CBN) on bank customers, and urged the President to stop its implementation forthwith.
The resolution of the House was sequel to the adoption of a motion by Hon. Kingsley Chinda, representing Obio/Akpor Constituency, Rivers State. It is laudable that Nigerians opposed the needless levy. This is one of levy too many for bank customers and it is unacceptable. The plan to introduce the levy followed the enactment of the Cybercrime (Prohibition, Prevention, Amendment) Act 2024, and pursuant to the provision of section 44(2)(a) of the Act, which provides for the rate deduction from customers’ deposits. Last week, the CBN directed all commercial banks, merchant banks, non-interest banks, and payment service banks to commence charging the 0.5 per cent cybersecurity levy on all electronic transactions. The government will collect about N2trillion or N3trillion from the cybersecurity levy.
However, about 16 banking transactions are exempted from the levy. They include loan disbursement and repayments, salary payments, intra-account transfers, within the same bank or between different banks for the same customer, intra-bank transfers between customers of the same bank, among other categories of transactions excluded from the levy. With the 0.5 per cent levy, N5 will be charged on a transaction of N1,000 and N50 on a transaction of N10,000. Similarly, N500 will be charged on a transaction of N100,000 and N5,000 will be imposed on a transaction of N1million and N50,000 on a transaction of N10million. Apart from the cybersecurity levy, there are over 10 different fees/levies already been charged customers for various transactions. These include SMS charge, Stamp duty, Value Added Tax(VAT), over the counter charge, and others.
The cybersecurity levy will add additional burden to manufacturers. According to the Manufacturers Association of Nigeria (MAN), its members are currently paying over 30 different taxes, levies and fees to the federal, state and local governments. Organised labour has stated that the cybersecurity levy will further impoverish Nigerians. No doubt, the cybersecurity levy will significantly lead to increase in the cost of doing business. The cybersecurity levy will hamper financial inclusion and government’s cashless policy as many people will avoid depositing their money in the banks. The cybersecurity levy will impede the harmonisation of taxes, a key objective of the present administration’s fiscal policy reforms. It is instructive that the Chairman of the Presidential Committee on Fiscal Policy and Tax reforms, Taiwo Oyedele, has opposed the levy. In the same vein, the Socio Economic Rights and Accountability Project (SERAP) has urged President Tinubu to shelve the new levy, citing relevant provisions of the 1999 Constitution and Nigeria’s international human rights obligations and commitments that make the levy grossly unlawful and unconstitutional.
In addition, the cybersecurity levy is ill-timed. It is coming at a period of rising inflation. The levy will discourage financial intermediation, which is a key role of the banking industry. It could also complicate the transmission of monetary policy with more people shunning patronising the banks as a result of high charges. The gains from e-commerce will be vitiated by the cybersecurity levy. As at 2023, the e-payment data in the country grossed over N600trillion. The government should halt the levy and await the recommendations of the Presidential Committee on fiscal policy and tax reforms. One of the mandates of the committee includes streamlining multiple taxes and levies that are currently inhibiting the growth of businesses. Nigeria’s banking and financial services sector may remain at the back seat of global banking ranking if the CBN does not initiate far- reaching measures that will rekindle confidence in the sector. Imposing sundry taxes will not grow the economy.