Nigerians are trying to adjust with the new Cash withdrawal limits by the Central Bank of Nigeria (CBN); while many are not comfortable with it, some have found advantages in the policy.
Even the house of representatives could not swallow it.
Many have wondered if this new policy is ment to help Nigeria or totally destroy Nigerians.
Angry with the N100,000 weekly cash withdrawal limits and its attendant economic and social challenges, the House of Representatives at Thursday plenary asked the Governor, Mr. Godwin Emefiele to suspend implementation of the policy.
Emefiele was asked to cause an appearance Thursday next week to explain to the House on the impact and significance of the new policy.
The suspension is to last pending the outcome of the expected engagement with the House on the compliance with the relevant sections of the CBN act and the 1999 constitution on the monetary policies of the apex bank.
The resolution was sequel to a motion under matters of urgent public importance moved by Hon. Magaji Dau Aliyu.
Apart from the minority leader, Hon. Ndudi Elumelu who supported the CBN policy in that it will curb banditry and reduce the incidence of corruption, many other lawmakers who spoke, vehemently condemned the decision of the CBN.
The opposition may eventually signpost a directive by the House by a way of resolution to drop the policy after the Wednesday meeting.
Midway into the proceedings, Hon. Mark Gbillah raised a point of order, citing relevant sections of the CBN act and the 1999 constitution, reminding the House that the CBN governor ought to be giving periodic briefings on monetary policies of the apex bank to the national assembly.
He noted that the CBN was yet to explain to Nigerians how the redesigning of the Naira was funded, stressing that there was no approval of such expenditures by the national assembly.
To that end, the Speaker, Rep. Femi Gbajabiamila who felt convinced after confirming from some members of the relevant Committees of the House on the absence of Emefiele for the briefings relied on the sections of the laws so quoted to sustain the point of order.
He eventually heeded to the prayer of the substantive motion and ruled that Emefiele be summoned to brief the House next week.
Meanwhile, Taiwo Oyedele, an economist have outlined the disadvantages of this new policy which is ment to support the Nigeria cashless policy.
Mr Oyedele in a commentary monitored by GBETU said;
“The new cash withdrawal limits will have tax implications especially for individuals and MSMEs.
“As many people will be forced to carry out transactions using electronic payments, small businesses that currently operate mostly on cash will become visible to the tax authorities.
This will trigger various tax obligations including:
Income tax
If your business is registered as a company you may be liable to CIT depending on your annual turnover (i.e. no CIT if your turnover below N25m, 20% if your turnover is between N25 to N100m, 30% if your turnover is more than N100m) in addition to Education Tax at 2.5%.
If your business is not registered as a company then you will be liable to personal income tax based on graduated taxable income bands between 7% and 24%.
VAT
All businesses are required to register for VAT and charge 7.5% on their goods and services except those with annual turnover below N25m.
PAYE
All employees earning more than N30,000 per month are liable to PAYE which must be deducted and paid to the tax authority by the employer on a monthly basis. You may also be liable to other statutory contributions such as pension depending on your staff strength.
Individuals
The more transactions you make electronically the more the tax authorities will get the intelligence to track your income and net worth making it easier to fish you out if you are a tax evader.
What to do
If you’re a small business owner, you need to take some steps now:
- Register with the relevant tax authorities (FIRS and the State Internal Revenue Service where you operate)
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Open a separate bank account for your business (or dedicate one for that purpose if you already have a business account) and don’t mix business with personal transactions.
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Government on its part needs to sensitise the general public especially small business owners, and the CBN should ensure a proper handshake with the fiscal authorities. For instance, the conditions for excess cash withdrawals could include Tax Identification Number.
Also, Ayobamidele Paul of Ascent University College said:
“I foresee the failure of this policy because it is demand related and has not been properly linked to the supply aspect.
The technology for electronic transaction still fails many of the times. My bank app has been deactivated over 6 months now and have not been able to use it. I have visited my bank over and over again and yet no solution. The same thing is with my USSD facility. I can only use ATM or go into the bank.
The technology still get many k legs. The available functionality of tech for electronic transaction will definitely affect this policy.
Moreso, if govt want citizens to use this channels banks and govt must do away with all the crazy charges being imposed on electronic transaction. Direct taxes and crazy charges are disincentives to make the policy work.
Let me just stop here.”
But Opeyemi Owolabi, a Business Process Analyst begs to differ.
Owolabi said;
“There are several benefits in this initiatives. However, this benefits can’t be realized if the Nigeria banking system is still porous to cyber attacks.
- Scammers can easily wipe away money from customer account.
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Failed transactions will affect most business (There is alot of resultant effect to this).
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Fake transaction alert which has been a common occurrence.
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Customer trust on the banking system is extremely low.
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Those who are targeted by this regulations will easily circumvent this regulations
Also supporting, Olaleye Lateef, a Managing Partner/CEO at Microcalculus Logistics Services Ltd said;
“This is the best monetary policyi instrument ever. If it’s going to translate to fiscal policy in the area of taxation; the better for all. It’s like using a stone to kill two birds. The people that are paying tax in Nigeria today are government workers and those working in the formal sectors and big corporations and establishments. Those in the informal sectors making money daily hardly pay tax or don t even pay at all. The more people that can dragged into tax net; the better for our economy and that means more diversification from revenue from the oil export.”
