Nigerian Govt. to earn N2.5b daily from N50 bank charge

Nigerian banking hall

The Federal Government of Nigeria is set to recoup a huge amount of money from the minute charges levied on bank transactions per day.

Over 50 million active accounts in the banking sector will be enlisted in the new revenue drive of the Federal Government with the takeoff of the N50 stamp duty on financial transactions according to the Guardian.

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.

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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, 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 said.

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