Minister of Finance and Coordinating Minister of the Economy, Olawale Edun, on Tuesday reiterated his confidence in the federal government’s proposed one-off levy on the 2023 foreign exchange (forex) windfall by banks.
The federal government’s proposal to tax the banks’ gain is contained in the proposed amendment to the 2023 Finance Act before the National Assembly. Also before the National Assembly is an Executive Bill seeking an amendment to the 2024 Appropriation Act to raise N6.2 trillion to fund infrastructure.
Appearing before the National Assembly Joint Committee on Finance, Edun and Federal Inland Revenue (FIRS) Chairman, Zach Adedeji, said it is normal for government to impose such levy on windfall arising from changes in government policy and ensure that the profit is redistributed to the people.
The minister told the panel that there is nothing new in imposing such levies on windfall all over the world, and in this case, the local banks profited so much from foreign exchange transactions not by their ingenuity but because of changes in government policy. The minister explained that the monies to be taken from the banks should not be considered as tax but levies, dismissing the view that the levies would be passed on to customers.
The proposed legislation has however been greeted with a few concerns, a major one being that banks could transfer the burden of the levy to their customers. But the finance minister urged the lawmakers to give the banks the benefit of the doubt, allaying fears regarding possible cases of underreporting by banks.
The FIRS boss explained that the bank windfall profits levy would help in balancing the economic inequality in the country especially after the government introduced its harmonization policy of the foreign exchange market. According to Adedeji, the manufacturing sector has made a N1.7 trillion loss as a result of the forex and based on that, the agency cannot tax them.
Chairman of the joint Committee, Senator Sani Musa, said the intent behind the levy is to ensure that banks contribute their fair share to national revenue, especially in light of the substantial gains made from forex.
