• Sunday, May 19, 2024
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Stakeholders back Tinubu on suspension of cybersecurity levy

Stakeholders back Tinubu on suspension of cybersecurity levy

….say lack of social compact, others hindering citizens voluntary tax compliance

Stakeholders in the Nigerian tax space have applauded the decision by President Bola Ahmed Tinubu to halt the implementation of the cybersecurity levy, stating that the implementation of the levy would have drained the resources of the Nigerian populace.

The Central Bank of Nigeria (CBN) on May 6, 2024, issued a circular mandating all banks, mobile money operators, and payment service providers to implement a new cybersecurity levy, following the provisions laid out in the Cybercrime (Prohibition, Prevention, etc) (Amendment) Act 2024.

According to the Act, a levy amounting to 0.5 per cent of the value of all electronic transactions will be collected and remitted to the National Cybersecurity Fund, overseen by the Office of the National Security Adviser. With the circular, financial institutions are required to apply the levy at the point of electronic transfer origination.

But last weekend, President Tinubu directed the suspension of the implementation of the cybersecurity levy and ordered a review to avoid overburdening citizens who are already battling economic hardship due to reforms.

Speaking at the 26th annual tax conference of the Chartered Institutes of Taxation of Nigeria (CITN) Abiola Sanni, professor of Law, University of Lagos stated that, “When we have cybercrime levy, you do not have to be an expert to know that it is dead on arrival, because the driver of the ship has said I am not going to do certain things no matter what we may have in our tax policy document”.

“What we need to do now is to have a good gate keeping policy system so that we do not have spoilers that will middle the water.

“We cannot start a culture today and expect it to evolve tomorrow, we must be patient. We cannot think that we will make N3trillion the way the promoters of cybersecurity levy have said. It is not possible unless we want to be draining the blood of the people.

Speaking further, Sanni stressed on the need for electoral Act to be amended to ensure that political parties incubate tax policies in their platforms before they get into power.

“We do not have to increase tax rate immediately, tax rate going up will not send the right signals to Nigerians,” he added.

In his paper presentation, Biodun ADEDIPE, managing consultant, B. Adedipe & Associates noted that taxation is a global challenge that comes with varying issues across different jurisdictions.

He said that expanding tax compliance is especially important to Nigeria’s economic renaissance at this time, being an opportunity to change the decades-old narrative of the disconnect between the oil and non-oil economy.

Noting that oil accounts for average of about 90 percent of merchandise exports and 60 percent of government revenue but represents only about 5.78 percent of GDP, Adedipe said that there is a chance with the current Tinubu administration which is known for reforms, to decisively address this vulnerability to external shocks caused by the vagaries of the international oil market.

“The role that taxes play in economic development is complicated and has been subject to much debate. It is argued that tax breaks can create an attractive investment climate, that will result in business and job creation. The corollary is that reversal of tax breaks will drive business away and cause job losses.

“As such, development should vary across states and regions according to the differences in their tax policies and practices, it also follows that tax authorities will set and reset tax policies in analysis ignores order to attract business and foster growth.

He explained that perception of taxation as expanding access to more funds for corrupt enrichment, no social compact, little or no consequence for noncompliance and high tax incidence and burden had hindered citizens voluntary compliance to tax regulations.

Adedipe noted that there has been significant progress in international tax co-operation to tackle fraud, tax avoidance, and tax evasion, but important challenges remain in domestic revenue mobilization, especially in developing countries. Added to these challenges are low levels of taxpayers-per-capita, revenues and tax morale.

He said, “Particular emphasis should be on improved transparency in governments fiscal operations, automate as many of the activities in tax administration as possible, strict monitoring and evaluation of process outcomes, supported with consequences for errant behaviour, especially on the part of tax administrators.

“If tax revenue increases significantly by widening the tax net and deliberate interventions in the informal sector, especially those having potential to scale to become formal, it can accelerate development enablers such as Infrastructure renewal; technology leverage; reduced dependence on oil revenue.

“This for me, is the cornerstone of a recalibrated tax culture that will drive voluntary compliance and change the narrative about the effectiveness of Nigeria’s tax system.”

Also speaking, Babatunde Fowler, the former chairman of the Federal Inland Revenue Service noted that Nigeria cannot have sustainable development without adequate tax revenues.

He stressed on the need for greater engagements at the state levels, noting that most governors do not understand the amount of revenue that can be generated through Internal Revenue Service.