• Thursday, May 30, 2024
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BusinessDay

Cybersecurity levy mistimed, should be targeted at the rich, not the poor – NESG

Nigeria needs serious reforms to trigger multi-trillion dollar economy – NESG

The National Economic Summit Group has faulted the timing of the cybersecurity levy, a directive by the Central Bank of Nigeria, stressing that it should be directed at the wealthy and not the vulnerable.

The Group, in a note stating its position on the policy on Thursday said that the 0.5 percent levy will pose a burden on the poor who are already suffering under a cost of living crisis.

“Amidst the cost of living crisis exacerbated by rising inflation, the cybersecurity levy is mistimed,” NESG said.

The economic group noted that the policy will exert an adverse impact on households whose disposable income has been squeezed by persistent inflationary pressure.

“The NESG posits that the levy should be targeted at high-net-worth individuals and a specific amount transferred electronically to allay the fears of the populace,” it added.

The cybersecurity levy is coming at a time when Nigerians are still battling with the shocks of the removal of petrol subsidy last May which has seen the price of petrol accelerate at a fast pace.

During the same period, the government also embarked on monetary reforms, a policy that has caused the fluctuation of the naira against the US dollar and pushed inflation to a record.

And just recently, it removed electricity subsidies, hiking it by 300 percent. This has mounted pressure on households while businesses are struggling to survive.

NESG stated that adding another levy will stiffen the purchasing power and welfare of corporations and individuals.

According to the Group, the 0.5 percent levy may result in Nigerians jettisoning electronic transfer, a move that could dampen revenue generation.

“Nigerians will boycott electronic funds transfers, which does not even bode well for the government due to revenue loss from electronic transfer levy,” it said.

Admitting the need for more revenue generation through tax, NESG said the government needs to properly sequence its policies for efficient socioeconomic outcomes.

It also said that pending the outcome of the mandate of the presidential tax reforms and fiscal policy committee, the cybersecurity levy be put on hold to avoid conflict of interest.

“To avoid conflict of interests and ensure no policy misalignment, the NESG strongly believes that the levy be deferred and proper consultation until the Fiscal Policy Committee deems it necessary,” NESG said.

The Central Bank of Nigeria on Monday ordered banks operating in Nigeria to begin charging a 0.5 percent cybersecurity levy on transactions by the Cybercrime (Prohibition, Prevention, etc) Amendment Act of 2024.

The CBN had warned that any financial institution that breaches any of the provisions as contained in the guide will pay a penalty of N2 million per infraction or as may be determined subsequently by the apex bank.

With the new cybersecurity levy, it will cost N80.88 to transfer N10,000 and N54 to receive it, reducing the real value exchanged to N9,865.