Stamp duty as revenue earner
ALTHOUGH the new revenue drive of the Federal Government, through the imposition of N50 stamp duty by the Central Bank of Nigeria (CBN) on transactions from bank accounts to financial institutions may be a fiscal strategy to boost national earnings, the constitutionality of this act, which is already in force, is an issue that discerning Nigerians would want the government to reconsider.
In a circular directing banks to strictly implement the new policy, the CBN explained: “As part of the efforts to boost its revenue, the Federal Government is exploring revenue opportunities in the non-oil sector, especially taxes and rates.” The circular went further to advise that: “Banks and financial institutions are enjoined to support government’s revenue generation drive through compliance with the provisions of the Stamp Duty Act (2004).” By this provision, the N50 stamp duty would be charged per transaction in respect of teller deposits and electronic transfers for the value of N1000 and above.
Pundits of the revenue drive have even speculated that projected earnings of N2.5 billion are accruable daily from the N50 stamp duty policy. However, as exciting as this projection seems, the burden of this charge on customers as well as the question of how equitable it would be are somewhat worrisome.
Traditionally, stamp duties are administered for agreements, purchases involving large sums, importation of goods, and sundry transactions demanding receipts, any of which government agencies could capitalize on. Thus, Section 89(2) of the Stamp Duty Act of 2004 states: “Every receipt given by any person in acknowledgement of good produced or services rendered should be denoted by an adhesive postage stamp worth N50 issued by the Nigerian Postal Service.”
Pray, as it concerns cash deposits and electronic money transfers, how are stamp duties supposed to be administered? Is it a fair deal? Why would one be made to pay for receiving one’s own money? What is the legality of the imposition? If a student pays or transfers N1000 into his current account, and a Senator does same for N5 million, does it make sense equitably to administer a N50 stamp duty for both? It would seem therefore that the only logical sense in this administration of stamp duty is money-drive, through taxation of poverty.
The CBN directive to banks is faulted for being a rehash of the wanton arbitrariness for which government agencies are notorious. Puffed up by the inanities of dubious power, government agencies are often in the breach, or outright denial of constitutional provisions that guide their operations. A case that brings this to bold relief is the candid observation of the Nigeria Employers’ Consultative Association (NECA), which has drawn the attention of the public to a pending court case on some imposed stamp duty charges.
A recent press release reportedly issued by the Director-General of NECA, Olusegun Oshinowo, stated that there was a pending case at the Court of Appeal on the stamp duty matter between Kasmal International Services Limited and Access Bank & 23 others. If this is the case, why should the CBN overlook the pending court case? What example is the apex bank putting up by the way it administers its own processes?
Besides, the imposition of stamp duty is an indirect tax regime, and the CBN constitutionally does not have the power to either administer the stamp duty act or impose a tax. The power to administer the Stamp Duties Act falls within the purview of the Commissioner for Stamps as provided for in Section Six of the Act. Constitutionally, only the National Assembly has the powers to impose tax.
The inconsistency surrounding the management of charges, be it Commission on Transactions (CoT) or the stamp duty, is yet another demonstration of policy insecurity and vacillation of the apex bank in the management of information relating to its internal workings. Only last year, the CBN announced, in a circular titled “Implementation of Revised Guide to Bank Charges –Commission on Turnover,” that in January 2016, it would implement a zero-commission on turnover, thereby prohibiting banks from deducting CoT. Now, it seems it has turned around to take with the left hand what it has already relinquished with the right.
The decision to impose stamp duty as a way of taxing Nigerians to generate revenue is a disingenuous way to revamp the country’s dwindling economic fortunes. True, Nigeria has found itself in dire straits, yet in it too are hapless Nigerians trying to make sense of this unwarranted flagellation. What country in the world robs its groaning masses of their surviving widow’s mite to pay for its recklessness and fiscal irresponsibility? For many years, this country has witnessed criminal opulence of its public officers, unconscionable and blatant waste of resources that are a scandal to the most prosperous of nations. It is the height of insensitivity to the plight of the bleeding masses that political leaders have, year after year, looked the other way only to force a section of the masses to pay for this.
If the Federal Government were definite in its plan about this indirect taxation, it should have made the proposal part of the appropriation bill. The current regime of arbitrariness is certainly unacceptable.