Stamp duty and the Buhari administration

Apparently, as a direct result of the rapid decline in oil revenues and the need to raise non-oil revenues the federal government, through the Central Bank of Nigeria (CBN) mandated the banks to begin the compulsory collection of N50 ‘stamp duty’ levy for some electronic transactions at every financial institution nationwide. According to the CBN directive

“With immediate effect, all DMBs and other financial institutions shall commence the charging of N50 per eligible transaction in accordance with the provisions of the Stamp Duties Act and Federal Government’s financial regulations 2009, that is, all receipts given by any bank or any other financial institution in acknowledgement of services rendered in respect of electronic transfer and teller deposits, from N1000 and above.”
It is estimated that should the stamp duty collection succeed, the federal government expects to rake in over N2.5 trillion on it alone on an annual basis. It also promises to become the highest source of government non-oil revenue in Nigeria

However, the stamp duty collection was only limited to current accounts only. As stated in the CBN circular, “the following receipts are, however, exempted from imposition of Stamp Duties: (a) payments, deposits or transfers by self to self, whether inter- or intra-bank; and (b) any form of withdrawals/ transfers from savings accounts”.

Expectedly, the collections of the stamp duty has begun in earnest and not a few Nigerians are already groaning and complaining about the arbitrary manner under which it was imposed and is being collected by the banks.

While we realise the great need for the raising of revenues by the government, we advice that this should not be done arbitrarily and in such a manner as to stifle and small businesses and jeopardise the push for all Nigerians to embrace banking services. To begin with, the imposition of a straight tax of N50 on all deposits or transfers of N1000 and above is clearly regressive and against the true interest of the poor and struggling Nigerians. It means if a poor worker should transfer N100o to his aged mother, he will be charged N50 as also when a rich man should transfer N50 million to his client or business partner. This is most unfair. A truly progressive tax system should compel the rich and privileged to pay more than the poor. This tax punishes the poor and rewards the rich. It is not the kind of change the poor voted for.

Besides, the government should not have been in so much hurry to levy the tax. Enough time and notice should have been giving to sensitise Nigerians and seek their buy in.

Also, since the banks started collecting the tax, a lot of complaints of excessive charges have trailed the exercise. For instance, the owner of a small business reported being charged N30, 000 for only 27 lodgements in her account for a month. To be charged N30, 000 presupposes that there would be 600 lodgements. Clearly then, the collection system may be susceptible to abuse and fraud and the government has not put in checks and processes to prevent such abuses and frauds. It appears therefore that the ‘stamp duty’ tax conceived and slammed on Nigerians in a rush and without proper thinking and planning. This should not be associated with a government that touted itself to be a change agent and a government of the masses.

We urge the government to withdraw the tax until such a time when the government has done its home work well and properly and duly inform and educate Nigerians on the need for the tax. We also call on civil societies, labour unions and pressure groups to put pressure on the government to do the right thing and to stop taking Nigerians for a ride