The House of Representatives has approved a bill to impose a ‘Windfall Tax’ on commercial banks that benefited from the Central Bank of Nigeria’s (CBN) forex subsidies.
This decision follows the Finance Committee’s report on amending the Finance Act, 2023, to introduce and manage the new tax.
The CBN had intervened in the forex market by selling dollars below the official exchange rate to stabilize the naira, benefiting many commercial banks with substantial profits.
James Faleke, the House Committee chairman on Finance, noted that despite the CBN’s efforts, forex market volatility persisted, leading to abnormal profits for these banks.
However, Dr. Olisa Agbakoba, former President of the Nigerian Bar Association, criticized the proposed windfall tax, arguing it would negatively impact banks and their customers.
Agbakoba warned that such legislation typically results in the additional costs being passed on to the customers, thereby increasing their financial burden.
Last week, the Senate passed President Bola Tinubu’s request to amend the Finance Act to include a one-time windfall tax on banks’ foreign exchange profits for 2023.
The bill also proposes imprisonment for bank officers who fail to comply. Agbakoba cautioned that imposing a 50% windfall tax is excessive and could lead banks to find ways to recover the costs from their customers, ultimately affecting Nigerians whose money is deposited in these banks.