The Central Bank of Nigeria (CBN) and the federal government have come under fire from international tax and advisory firm KPMG for implementing the cybercrime charge outlined in the 2024 Cybercrimes Amendment Act, claiming that no nation can tax its way to prosperity.
In response to the new levy, the corporation said that there is empirical evidence showing that greater taxes do not promote sustainable growth and that, given the current status of the national economy, the timing of the Act’s implementation was incorrect.
It further noted that the need for revenue mobilisation in the face of significant challenges warranted the implementation of the levy despite provisions in the Cybercrime Act since 2015 even though the current economic challenges faced by citizens does not warrant introduction of new taxes.
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It stated, “Given this context, government may go to any length to mobilize the required revenue. However, research has shown that higher taxes do not lead to sustainable growth. In fact, no country can tax itself to prosperity! Perhaps, it is in recognition of this that the current administration and the Presidential Committee on Fiscal Reforms have often emphasized that the government will not introduce new taxes.”
Also, the firm criticised the lack of a cost benefit analysis given multiple reports of about N3 trillion to be generated from the levy annually. It further advised that such levies should be accompanied by an adequate expenditure statement to justify them.
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Furthermore, it questioned how the implementation of the act will drive financial inclusion across the country given the fear that individuals and businesses resorting to other forms of transaction.
It stated, “Various reports have indicated that Government will raise about N3trillion annually from the levy. However, there has been no formal presentation to the public of the cost and benefit analysis. It is always critical that the enactment of any tax or levy be accompanied by the tax expenditure statement to provide information as to whether the benefits of such tax or levy outweigh its cost.”
