• Wednesday, July 17, 2024
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NESG says cybersecurity levy undermines financial inclusion

‘Financial inclusion threatened by cybersecurity levy’

The Nigerian Economic Summit Group (NESG) has said that the Federal Government’s 0.5 percent cybersecurity levy would undermine the target to achieve 95 percent financial inclusion by 2025.

In a recent report, the levy was described as mistimed owing to the Central Bank’s efforts to achieve financial inclusion and reduce currency in circulation.

“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, who are still battling skyrocketing food and non-food prices. However, if this policy remains, several Nigerians will boycott electronic funds transfers, which does not bode well for the government due to revenue loss from electronic transfer levy,” the report stated.

Furthermore, the group stated that the policy is misaligned with the mandate of the fiscal policy committee to reduce the number of taxes and levies

“This policy is coming when the Presidential Committee on Fiscal Policy and Tax Reforms is yet to finalise its mandate. One of the terms of reference of the Committee is that the number of taxes should be streamlined.”

“Introducing a cybersecurity levy could thwart this essential mandate. To avoid conflict of interests and ensure no policy misalignment, the NESG strongly believes that the levy should be deferred and proper consultation until the Fiscal Policy Committee deems it necessary to implement it,” the report said.

In addition, the report noted that the levy further increased the cost of banking for the populace, making banks an expensive intermediary and increasing distrust in the financial system.

“The levy adds to the list of levies and taxes collected by financial institutions on behalf of the government, including stamp duty, electronic transfer levy, and VAT. This increases the transaction costs of using a bank and could disrupt the financial intermediation role of banks.”

“Furthermore, given the current strains that citizens face, perceived unfairness, lack of transparency and accountability would heighten distrust in the financial system,” the report said.

The group recommended that banking transaction costs be reduced, to motivate Nigerians to access financial services and prevent a potential surge in demand for cash.

Yesterday, the House of Representatives directed the CBN to pause the implementation of the 0.5 percent cybersecurity levy on transactions, stating that the Cybercrime Act was implemented wrongly by the CBN.

The House directed the CBN to withdraw the ambiguous circular and issue a new one that provides clarity, BusinessDay earlier reported.