The Central Bank of Nigeria has come up with yet another one! This time it’s called Stamp duty. For every lodgment, payment in excess of N1,000, into a current account, a N50 stamp duty is charged. The alert for this burdensome charge is one that a musician like Korede Bello will not be too happy to receive from his bank.
The Stamp Duties Act, Cap, 441LFN, 1990, written in the Olde English of its 1st April 1939 origin, is extremely terse and unyielding of its content and intent. Even banks, to avoid any confusion, are spared in the words used in the infomercials they send online to explain the new requirement. This density must be one reason that the statute was complied with in the breach for so long.
Stamp duty is “a stamp impressed by means of a die as an adhesive stamp for denoting any duty or fee;” a die is “any plate, type, tool, or implement whatever used… for expressing… any… rate of duty, or… penalty…(that) has been paid, or that an instrument is duly stamped, or is not chargeable with any duty….” A duty is “any stamp duty… chargeable under this or any other Act and… any fee chargeable hereunder.”
Documents that require Stamp Duty Act include notarial acts, agreements, conveyance of sale of land, powers of attorney, contract notes, valuations, capital or limited liability companies, bank notes, promisory notes, mortgage notes, share certificates, debentures, share warrants, insurance policy, customs bills of laden, bills of sale and receipts.
Section 89(2) of the Stamp Duty Act says: “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.” Section 14(2) of the same Act compels a mandatory receipt to be denoted.
Government expects to raise about N2.2 trillion annually from stamp duty, another pot of gold that may become its highest single source of revenue. You can be sure that they’ll mine it for whatever it is worth. It is good and expected of citizens to pay taxes to support, and own, their government. Government had always been run with taxpayers’ money, until easy oil royalties derailed the tax managers.
Stamp duty charge is payable on electronic transfers and cash payments into current accounts. An exception is given to payments by cheques because their stamp duty charges have already been paid. You will see a Stamp duty seal on the lower left side of a cheque. So you’ll see that bank customers had always been required to pay Stamp duty charges. The CBN just happens to be a poor communicator of its policies.
All that the CBN needed to do was to say that it limited collection of stamp duties to cheque payments. Now it wants to remind bank customers that it wishes to extend it to cash deposits and new technology electronic transfers.
You must wonder that the same CBN, which prohibited banks from deducting Commission on Transactions on withdrawals from current accounts at the beginning of 2016, has turned around to impose the stamp duty. It may well return bank customers to the era of receiving their monies in cash, and stuffing them into their mattresses or under their pillows. Some have observed that CBN is behaving like pastors who first collect their offerings and tithes before asking for help for a destitute member of the congregation.
A CBN circular explains: “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…Banks and financial institutions are enjoined to support government’s revenue generation drive through compliance with the provisions of the Stamp Duty Act (2004).”
Banks, their subsidiary discount, finance and mortgage finance houses, stockbrokers or dealers that routinely disregarded statutory requirements to affix stamps on their notes or financial instruments, caused the CBN to visit the consequences of their sins on unfortunate current account holders.
The Nigerian Postal Services is contesting the right of the CBN as statutory collector of stamp duty charges. As you probably know, an agency gets to retain a certain percentage of revenues it collects on behalf of government. NIPOST, in an attempt to break the ranks of banks, has appointed First Bank of Nigeria Plc, Stanbic IBTC Bank Plc and Unity Bank Plc as its lead collector banks for stamp duty.
NIPOST argues that its entitlement to stamp duty charge dates back to the era when post office stamps were statutory requirements on receipts issued for commercial, legal, and other qualifying transactions. Curiously, NIPOST somehow admits its failure to ensure compliance with this requirement that has caused it great loss of revenue.
If stamp duty charge is payable for commercial transactions, you will be correct to assume that by imposing it on banks transactions government just found a roundabout way to recoup revenue that no longer accrues to NIPOST because people no longer buy stamps to freight their surface mails. The internet email took care of that.
Some actually think that the stamp duty charge is not quite a charge for commercial transactions, but a punitive tax on the receipt of money. They wonder aloud how the government, CBN, or the commercial banks will distinguish between a payment for a commercial transaction and a transfer of funds as monthly allowance from a parent to his child in a university or a gift to an indigent relation.
Whereas the VAT is a sales tax, payable to government for buying a category of consumer items, the stamp duty charge, you will agree, is a tax payable by the vendor for making a sale; an equal time tax, if you like. And it does look like the government is willing to tax a willing horse to death. While commercial enterprises and individuals are complaining about multiple taxes, government is adding another. The whole thing is getting more complicated by the day. And that explains why Nigeria is regarded as one of the countries where it is most difficult to do business.
If government wants to exact taxation, it must urgently do things to enhance the ability of the supply side, or the productive sector, of the economy. Chude Jideonwu submits, at the recent inaugural conference of the Ibadan School of Governance and Public Policy, that “A real government ensures that it provides an atmosphere for its people to prosper, knowing that you can’t tax poverty. You can only tax wealth that is created…”
At the same conference, Eze Onyekpere submitted: “States have a… duty to formulate appropriate national development policies that aim at the constant improvement of the wellbeing of the entire population and of all individuals, on the basis of their active, free and meaningful participation in (the) development and fair distribution of the benefits resulting therefrom.”
With the introduction or reintroduction of stamp duty charges, increase in electricity tariffs and continued free fall of the naira, it does look like someone would like to dispossess Nigerian citizens of whatever they have before figuring out how to run the economy. Or what do you think? Yul Bryner’s character in the movie, ‘The King and I,’ says “It’s a puzzlement!”