The CBN authorities got it all wrong in the latest circular to DMBs and other financial institutions. There is absolute misinterpretation and misapplication of the provisions of the Stamp Duties Act LFN 2004. Apart from the fact that CBN lacks the statutory power to prescribe and impose taxes of which stamp duty is one, the Act at present does not contain in any portion the terms “electronic transfer” or “teller deposits” among the items on which stamp duty is accruable. Whilst the government is entitled to derive revenue from taxes and rates, such revenue should be legitimate, equitable and in accordance with the relevant and extant laws of the Federation of Nigeria.
In the first place, is a deposit into a bank account (as in CBN directive via electronic transfer or teller) what Section 89(2) of the Stamp Duties Act 2004 contemplates as “receipt”? The second question is whether a bank deposit is a “bill of exchange” or “promissory note” going by their definitions in Section 35 of the Act or even the Bill of Exchange Act LFN 1958. According to The Living Webster Encyclopedic Dictionary the term “receipt” is “a written acknowledgment of something received as money or goods/services” (which to all intents and purposes is implied in the Stamp Duties Act 2004). So when a bank customer deposits money into his/her account whether by transfer or teller over the counter which party can be rightly said to have rendered a service or received money and therefore should issue a “receipt”? Definitely, the bank rendering the customer the service of receiving the deposit should issue a “receipt” in acknowledgment and not the other way round. Following this logic then if the Act ever contemplated that bank deposits should attract a stamp duty, it is a bank that should pay the N50 on receipt of deposits.
Turning to the second question, it is trite to state that a bank deposit no matter how defined does not constitute a “bill of exchange or promissory note”. Indeed the Stamp Duties Act 2004 does not fall into this illusion but goes further to specifically exclude a “bank note” which in Section 35 it emphasizes is that issued by CBN. That is why it is curious that CBN has included bank deposits for purpose of stamp duty when in Nigeria they are largely its currency notes and coins and cheques (already bearing stamp duty embossed on them).
The third question is how did the CBN arrive at the N50 stamp duty it imposed “with immediate effect” on hapless bank depositors and what informed the minimum amount of electronic transfer or teller deposit of N1000 for the eligibility of stamp duty. The power of increasing, diminishing or repealing the duty chargeable under any of the heads specified in the Stamp Duties Act 2004 is by Section 116 vested on the National Assembly. It is also pertinent to point out that in implementing the current directive by CBN electronically, an important stipulation in Section14 (2) of the Stamp Duties Act 2004 is being ignored. The subsection states “an instrument falling under the particular description to which any stamp is so appropriated as aforesaid shall not be deemed duly stamped unless it is stamped with the stamp so appropriated. It also amounts to accruing unfair revenues for government at the expense of its citizens who have been as it were lured into a trap under the mantra of electronic banking and cashless policy. It is even incomprehensible when duly-taxed salary of a customer is subjected to stamp duty simply because it is electronically paid into the account and the same government collects VAT at its withdrawal from the same account.
For a long time CBN had agonized on the problem of the large volume of money outside the banking system and gave the impression of working hard to bring more unbanked public into the system. Why would a central bank not live up to its duty of consumer protection and mislead its government into believing that taxing bank deposits in a country struggling to increase its domestic savings base is a way of boosting non-oil sector revenue?
Finally a question the present CBN authorities and in deed, the Federal government should address is why deposit account customers of banks should be used to prop up the fortunes of Nigeria Postal Service – an institution which through its self-destructive tendencies and failure to innovate has remained a drain pipe instead of a revenue generating agent as in other climes.. How many Nigerians ordinarily still use the services of NIPOST today? Most children of primary school age in Nigeria today don’t know what a postage stamp looks like. Many Nigerians now use and pay exorbitantly for the services of courier companies that have mushroomed in Nigeria and/or send short and long messages to any part of the world with the wink of an eye with their smartphones via social media. Whether NIPOST as presently constituted has outlived its usefulness is a moot point. The thrust of future policy should be whether NIPOST and its functions deserves being reorganized and restructured in the light of technological advances in the communication industry to make it more functional or to continue propping it up by robbing “Peter to pay Paul” in the name of stamp duty with the attendant consequences in the long run on savings/banking culture. (Concluded)
Sunday. I. Owualah
