NESG Faults Timing Of Cybersecurity Levy, Says Nigerians Battling High Food PricesG urged the Federal Government to rethink the levy due to the burden of multiple taxation and inflationary pressures faced by Nigerians.
In a circular dated May 6, 2024, the CBN directed all deposit money banks, mobile money operators, and payment service providers to deduct the levy, which is to be remitted to the National Cybersecurity Fund (NCF) administered by the Office of the National Security Adviser (ONSA). This move has sparked widespread outrage, with labor unions threatening action.
NESG emphasized that the timing of the levy is inappropriate amidst the current cost of living crisis, worsened by rising inflation rates. They suggested targeting high-net-worth individuals for the levy and implementing specific measures to alleviate concerns among the populace grappling with soaring food and non-food prices. NESG cautioned that the levy could lead to a boycott of electronic fund transfers, resulting in revenue loss for the government.
Furthermore, NESG highlighted the need for careful consideration of socioeconomic impacts, especially given recent policy changes such as fuel subsidy removal, exchange rate reform, and electricity subsidy removal, which continue to affect businesses and citizens’ welfare. They called for proper sequencing of reforms to achieve efficient outcomes and expressed concern that the levy was introduced before the Presidential Committee on Fiscal Policy and Tax Reforms finalized its mandate. NESG proposed deferring the levy until proper consultation and alignment with the committee’s recommendations.
The cybersecurity levy adds to the already existing burden of taxes and levies collected by financial institutions, including stamp duty, electronic transfer levy, and VAT. NESG cautioned that this accumulation of taxes increases transaction costs and could disrupt the financial intermediation role of banks. They stressed the importance of balancing government revenue needs with the welfare of citizens and urged for a reconsideration of the cybersecurity levy in light of its potential negative consequences.
