President Bola Ahmed Tinubu has requested the National Assembly to increase the 2024 Budget by N6.2 trillion – from N28.77 trillion to N34.9 trillion.
Both chambers, the Senate and House of Representatives on Wednesday swiftly considered President Tinubu’s request for amendment of the 2024 appropriation bill
In letters addressed to the president of the Senate, Godswill Akpabio, and the Speaker of the House, Abbas Tajudeen, President Tinubu also requested that the Finance Act 2023 be amended to impose a windfall tax on banks to generate additional revenue.
Senator Tinubu requested the withdrawal of N3.2 trillion from the Consolidated Revenue Fund for capital expenditure and another N3 trillion for additional recurrent spending for 2024.
The Senate expedited the consideration of these requests by giving them first and second readings. They assigned their committees on Appropriations and Finance to provide further legislative inputs, and to report back within a week. The Leader of the Senate, Senator Michael Opeyemi Bamidele, explained that the amendment bill was aimed at funding infrastructure projects and meeting recurrent expenditure requirements.
The amendment to the Finance Act 2023 was intended to impose a one-time windfall tax on banks based on their foreign exchange gains in 2023.
Senator Adamu Alero emphasized the importance of supporting the bills to ensure funds for minimum wage payments and infrastructure projects. Other senators, including Sen. Garuba Maidoki, Adetukunbo Abiru, Adams Oshomole, and Sani Musa, also expressed their support.
Windfall Tax Anti-Development, Biased Against Banks, Say Experts
Expectedly, this proposal has not gone down well with experts in the industry.
Group executive chairman of Lancelot Group, Adebayo Adeleke, described the law “draconian.”
“It is anti-development. It shows the desperation of the federal government to inflict more pain on the economy. It is also unfair and biased against the banks.
“Will the federal government grant tax holidays to manufacturing companies who suffered heavy losses due to forex fluctuations? Why tax those who accidentally (not by design) gained in forex fluctuation?
“This is the same foreign gain that CBN said should not be taken into consideration in dividend payout to shareholders,” he added
Adeleke pointed out that whatever the Banks realised in forex translation formed part of the Company Income Tax that they pay.
“This law is now double taxation. The government is making the business environment more hostile. I doubt whether they are thinking deeply about the long-term negative implications of spontaneous economic decisions. The government is punishing wealth creators for funding huge appetite of politicians and rent-seekers.”
Commenting on the president’s request, the Head of Financial Institutions Rating at Agusto & Co, Ayokunle Olubunmi, said the timing of the directive is not good as the banks are in a capital-raising mode.
Stating the need for clarity on what the government terms a “windfall tax” and the tax rate, he said, “The directive could dampen investor confidence which could adversely impact the ongoing recapitalisation exercise.”
