Pandora’s box
The House of Representatives has asked the Central Bank of Nigeria (CBN) to halt the implementation of the 0.5 percent cybercrime levy on…
The House of Representatives has asked the Central Bank of Nigeria (CBN) to halt the implementation of the 0.5 percent cybercrime levy on transactions after the Minority Leader, Kingsley Chinda (PDP, Obio/Akpor, Rivers State), said the law did not put the burden of the levy on bank customers. Mr Chinda cited section 44(2)(a) of the Cybercrimes (Prohibition, Prevention, etc.) (Amendment) Act 2024, mandating telecommunication, internet, banking, insurance, and stock exchange companies to pay the levy. President Bola Tinubu has also instructed the CBN to suspend the implementation of the cybersecurity levy in response to public backlash.
The cybersecurity levy is another tax that would have been imposed on Nigerians if the citizens had not spoken loudly against it. It is clear that this was not thoroughly thought through by the FG and CBN, and the best course of action was to suspend the implementation. Given Nigeria’s low tax-to-GDP ratio, we understand the government’s need to enhance tax revenue; however, there are better ways to achieve this goal. Some senior lawyers have argued that the CBN misinterpreted the Act. They argue that both the 2015 version of the Act and its 2024 amendment specify that the levy should apply to all electronic transactions conducted by the businesses listed in the Act, thus, the levy should be imposed on the business entity, not its customers. It was always an anomaly for CBN to impose such a charge on the end user. Service providers should guarantee the profitability, safety, and integrity of the transactions they facilitate for the general public. They are responsible for maintaining secure platforms and implementing robust systems to protect users from potential risks while ensuring their services remain sustainable and financially viable. Charging a service charge and a separate tax for cyber security is extortionate. It should not just be suspended but totally expunged from both the law and subsidiary regulations. Legislators in the House of Representatives have agreed to modify the levy. While we await the result of the review, we need to talk about the approach of the Tinubu administration and the timing of its policies. The Tinubu administration seems swift in implementing subsidy removals and levy adjustments yet sluggish in executing social intervention programmes necessary to mitigate these policies’ adverse effects. The policy coordination unit must take its responsibility seriously, as the well-being of 200 million citizens hinges on its effectiveness.