Lower windfall tax gradually, CIoD tells FG

The Chartered Institute of Directors Nigeria (CIoD) has called on the federal government to consider lowering the windfall tax rate gradually over the years to give banks time to adjust.

The Director General of CIoD, Bamidele Alimi, said this in a statement titled: “Reconsidering the Bank Windfall Tax:  A Call for Balanced Economic Policy”.

The body noted that high windfall tax could hamper banks’ ability to strengthen their capital bases as they were currently engaged in recapitalisation to meet the Central Bank of Nigeria’s (CBN’s) minimum capital requirement.

It also noted that the high windfall tax was its potential to reduce the lending capacity of banks and negatively impact shareholder returns.

In its eight-point recommendation, CIoD said it was worried and therefore noted that the drawbacks could have adverse effects on the economy.

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Some of the recommendations are to reduce the tax rate gradually, introduce thresholds for tax applicability, offer incentives for investment in innovation and conduct a comprehensive impact assessment to understand its potential effects on the banking sector and the broader economy.

Others are to encourage stakeholders’ consultation, promote alternative revenue sources, implement varied percentages for sustainable banking practices, as well as monitor and review the policy regularly.

“While the intention behind the Bank Windfall Tax policy may be to generate additional revenue for the government, the potential negative implications for the banking sector and the broader economy are significant. We urge the government to reconsider the policy, to find a balance that ensures both revenue generation and the continued growth and stability of the banking sector.”