It is a welcome development that the Central Bank of Nigeria finally withdrew its circular requesting banks to deduct the cybersecurity levy after the National Assembly and President Bola Tinubu ordered its withdrawal.
When America’s State of Massachusetts overburdened its residents with too many taxes, it was christened “Taxachusetts.” The sundry taxes that the Tinubu administration has been introducing may soon cause the addition of ‘tax’ as a prefix or suffix to the name of Nigeria; not exactly a great testimonial for a government that promises to streamline taxation by 95 per cent.
The inefficiently defined cybersecurity levy was the latest evidence of this tendency of the government. Even though attorney and civil rights activist, Femi Falana, says those liable to pay the levy are even (corporate organisations in the) businesses (or sub-sectors) listed in the Second Schedule of the Act and not individuals.
When you go through the Act, you don’t even know the exact “electronic transactions” that qualify for the deductions! Here’s what Section 44(2)(a) of the Act says: “There shall be paid and credited into the Fund… a levy of 0.005 (per cent) of all electronic transactions by the businesses specified in the Second Schedule to this Act.”
Affected businesses should include GSM service providers and telecommunications companies, Internet service providers, banks and other financial institutions, insurance companies and stock exchange players.
Margaret Thatcher, former British Prime Minister, admonishes: “No nation ever grew more prosperous by taxing its citizens beyond their capacity to pay. (The political class) have a duty to make sure that every penny piece we raise in taxation is spent wisely and well.”
Chief Whip of Nigeria’s Senate, Ali Ndume, puts it more adroitly when he asked the government to first find a way to raise the income of Nigerians before coming at them with another tax.
So, if the projection of Dr Muda Yusuf’s Centre for the Promotion of Private Enterprise is correct, the N3 trillion to N7.75 trillion that may be raised from the resurrected cybersecurity levy may just end up as another fund waiting to be squandered (on big government).
Reno Omokri of the Peoples Democratic Party, probably a closet fan of the All Progressives Congress, reportedly says the levy was originally introduced by an Act of the National Assembly in 2015 and is now being reinforced by the Cybersecurity (Prohibition, Prevention, etc) Amendment Act 2024.
This volunteer spokesperson for the Tinubu administration gives a rather simplistic, if also off-point, argument that “(Nigeria’s) cybersecurity architecture is porous,” and “as long as (the cybersecurity architecture) is vulnerable, the naira cannot be stable. And if the naira is not stable, your purchasing power as a Nigerian will reduce drastically.” (All emphases are Reno’s).
Indeed, the International Monetary Fund is the architect of this levy. In 2015, it coaxed the Goodluck Jonathan administration, just like it did to other governments in the world, to enact the Cybersecurity Act.
Neither the Jonathan nor the Muhammadu Buhari administration had the spunk to put the law into operation until the Tinubu administration came to discover that the government is really broke, and had to look for money any which way.
Well, everyone agrees that government is a continuum and implementation of policies does go beyond the tenure of the government that initiated them. However, each government has the prerogative to review old policies and introduce new ones.
Maybe in an attempt to publicly endorse the action of the CBN to start collecting the levy, the IMF revealed, in its “Global Financial Stability Report, April 2024,” that in the last 20 years, financial institutions lost about $12 billion to cyberattacks globally.
As you can see, the introduction of digital technology to the financial and banking systems of the world came with its own cost. As they say, every ship that is built comes with its potential for a shipwreck.
By the way, Section 5 of the Act provides that, “An amount, not exceeding 40 per cent of the Fund, may be allocated for programmes relating to countering violent extremism,” (or insurgency, to put it in clearer terms).
It is probably necessary for the CBN to clarify that the money so collected belongs to the government and not the banks that are merely going to be acting as collection agents, the same way corporate organisations help the Federal Inland Revenue Service to collect Value Added Tax.
To be clear, this processing fee for cash deposits is different from the Money Laundering (Prohibition) Act, 2011 (As Amended), which limits cash transactions to N5 million for individuals and N10 million for corporate organisations.
Anyone who has experienced his or her money being stolen from the vaults of banks through ATM withdrawals or outright fraud, with the banks acting as if they couldn’t help the fraud, won’t be too disposed to pay any levy.
Expectedly, the Nigeria Labour Congress, nemesis of anti-people governments, has rejected the cybersecurity levy, after losing its dogged fight against the policy that requires the naira to find its level, as well as the indirect taxation achieved by the removal of subsidy from petrol and electricity.
Already, Nigerians pay personal income tax, customs and excise duty, stamp duty, sms alert to banks, what they call counter cheque charge and value-added tax, the ubiquitous tax paid by Nigerians through company tax and the sometimes indescribable taxes paid to local government authorities and motor touts.
Banks already charge commissions on transactions on any withdrawal from current or checking accounts in the bank. Nigerians, who are already overtaxed, do not need to be made to pay another tax again.
If you add inflation, and its direct impact on the cost of living, especially on transportation and foodstuffs, the most strategic existential costs that everyone bears, you will understand the extent of the anguish of people living in Nigeria today.
Civil society organisations already asked the Minister of Justice and Attorney General of the Federation, Lateef Fagbemi, to return the Act to the National Assembly for a repeal.
The hyperinflation, caused by the removal of subsidies from petrol and electricity and the floating of the naira, has already dug big holes into the finances of impoverished Nigerians.
Some speculate that the CBN’s sudden suspension of the processing fee for corporate organisations, till September 30, 2024, was a ploy to encourage acceptance of the cybersecurity levy, which will be returned when the coast is clear.
Though there is a slew of transactions exempted from the levy, Nigerians are wondering if the banks will truly restrict deductions toward the levy to whatever are the qualifying transactions.
Some of the exempted transactions are loan disbursements and repayments; salary payments; transactions within the same bank or the same customer using different banks; letters of credit and investments in treasury bills and treasury bonds; and payments to educational institutions.
Someone wonders why the government encourages citizens to embrace digital banking and then turns around to tax them for compliance. Is this a trap set to take the money of Nigerians with ease? This tax will certainly discourage Nigerians from banking their money and defeat the IMF-inspired cashless banking policy of the Federal Government.
But what was CBN’s point in introducing the cybersecurity levy if it could eventually step it down?
