FG TO EARN N2.5b FROM N50 BANK CHARGE DAILY

The Central Bank of Nigeria (CBN) has already communicated the commencement of the N50 stamp duty deduction on receipt of financial value of N1000 and above from bank accounts to financial institutions.

However, only transfers from personal account to another personal account, both at the same bank or another bank are exempted from the charge.

With the act already in force, there are projections that the total number of direct cash lodgements in various accounts in banks, the transfer of cash arising from Point of Sale, Automated Teller Machines and mobile money transactions, among others, may hit 50 million in volume per day, with an estimated value of about N2.5 billion daily.

The recently concluded phase of the Bank Verification Number (BVN) project had identified 22 million unique identities in bank accounts, which own over 30 million other accounts spread across the banking sector.

According to the CBN, the stamp duties are deductible on deposits into accounts and borne by the receiving accounts. Yet, another reliable source in the banking sector argued that the revenue earnings capacity of the stamp duties – when estimated moderately, given the improved payments system environment of the country, both in public and private sectors of the economy – shows that there will be no fewer than 25 million deductible transactions per day, which will amount to N1.25 billion daily.

While expressing optimism on the potential return of effective taxation, a professor of entrepreneurship and political economy, Pat Utomi, told The Guardian that there would be the need for caution to ensure that the pace of tax expansion does not depress consumption and growth.

“Nigeria,” he said, “has a challenge with no easy answers. For a long time, oil receipts made taxes an irritation to those who govern. The result was that the citizen was disconnected from holding the public official accountable. Costs in government went crazy. As oil revenue declines and taxation is rediscovered, the needful will be challenged in two directions.

“In one direction, from policy makers we must take care in ensuring the pace of tax incidence expansion does not depress consumption and growth. Still, the financing gap needs to be bridged by an optimal level of borrowing and new taxes.”

Utomi continued: “At the same time, deep cost-cutting in a wasteful system needs to be implemented. In the other direction, citizens need to know that a return of dependence on taxation for governing will reduce uncertainty in the budget process. When Value Added Tax (VAT) was introduced years ago there were issues raised about it but it has been a useful tax.”

The Managing Director and Chief Economist, Africa Global Research, Standard Chartered Bank, Razia Khan, said the N50 stamp duty enforcement was necessary, given the urgent need to drive higher revenue collection of the country. He said there was no foreseeable “detrimental effect on financial access in the long-term.”

Stakeholders have also commended the move, advising however, that to get the best of the policy, the authorities should strengthen the payment system to ensure that most transactions in the economy are routed through the banking system.

According to the Head of Investment Research at Sterling Capital Limited, Sewa Wusu, the move is legal and now adopted due to the circumstances the country is going through, which have heightened macroeconomic issues.

“This is another fiscal strategy to meet budget spending. Transactions are going on everyday in the financial system and this is the more reason to believe that the Nigerian economy is capable of financing itself. Though some will complain, but for me, this is a fiscal response. The act has been there and this shows that there are other opportunities in the economy. This type of law is also obtainable in other jurisdiction.

“No matter what pains we may feel from this policy, we can take it in good faith, at least as a sacrifice to the nation. N50 is money, b