Following a CBN circular directing banks to start collecting and remitting a cybersecurity levy on electronic transactions, the former presidential candidate of the Labour Party at the 2023 presidential election, Peter Obi has accused the Federal Government of milking Nigeria’s dying economy.
The former presidential candidate who has settled well into his role as the head of the opposition made the statement in a series of tweets. In one of the tweets, he lamented that the government ought to be looking for ways to revive the economy and stave off the ever-rising inflation instead of looking for ways to further squeeze the economy.
“The introduction of yet another tax, in the form of Cybersecurity Levy, on Nigerians who are already suffering severe economic distress is further proof that the government is more interested in milking a dying economy instead of nurturing it to recovery and growth,” Peter Obi said in the tweets.
He further pointed out that the new levy does not only amount to multiple taxations on banking transactions, which are already subject to various other taxes including stamp duties, but it also negates the Government’s avowed commitment to reduce the number of taxes and streamline the tax system.
He said the imposition of a Cybersecurity Levy on bank transactions is particularly sad given that the tax is on the trading capital of businesses and not on their profit hence will further erode whatever is left of their remaining capital, after the impact of the Naira devaluation and high inflation rate.
“It is inconceivable to expect the suffering citizens of Nigeria to separately fund all activities of the government. Policies such as this not only impoverish the citizens but make the country’s economic environment less competitive,” The former Anambra State governor said.
He pointed out that this was a time when the government should be reducing taxes to curb inflation, not introducing new taxes. He also queried the rationale behind remitting the funds to the office of the National Security Adviser, an office which by law should not be a revenue collecting centre.
“And why should that purely national security office receive returns on a specific tax as stated in the new cybersecurity law?” he finished.
Nigeria’s Cybersecurity Levy
On May 6, the Central Bank of Nigeria (CBN) directed banks, other financial institutions and payment service providers to start implementing Section 44(2)(a) of the Cybercrime (Prohibition, Prevention etc) (Amendment) Act 2024 in two weeks. The section provides that ‘a levy of 0.5 per cent (0.005%) equivalent to a half per cent of all electronic transactions value by the business specified in the Second Schedule of the Act be remitted to National Cybersecurity Fund (NCF).
The fund will be administered by the Office of the National Security Adviser (ONSA). The only electronic transfers that would be exempt from this levy include salary payments, loan disbursements and repayments, intra-account transfers within the same bank or between different banks for the same customer, and intra-bank transfers between customers of the same bank.
Others include bank transfers to the CBN and vice-versa, Inter-branch transfers within a bank, cheque clearing and settlement, savings and deposits including transactions involving long-term investments, government social welfare programmes like pension payment, educational transactions etc.
The cybersecurity levy has since drawn widespread condemnation from Nigerians. According to them, the levy was ill-conceived and ill-timed given the rising cost of living occasioned by high inflation and fuel subsidy removal. The government is therefore expected to be rolling out palliative measures to ameliorate these pains rather than imposing more taxes.
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