FG justified to ask banks to pay FX windfall tax, says OAU prof

Adetunji Ogunyemi, a professor at the Obafemi Awolowo University (OAU), says the windfall tax on banks’ foreign exchange (FX) gains is justified.

On July 17, the national assembly said President Bola Tinubu requested the amendment of the 2023 Finance Act to impose a one-time windfall tax of 50 percent on banks’ FX gains.

Tinubu said the windfall tax will be used to finance infrastructure projects, education and healthcare, among others.

The national assembly passed the bill on July 23 and increased the windfall tax to 70 percent, with retroactive application from January 1, 2023.

The professor of economic history, in an interview, said Nigeria is “currently in dire straits financially and economically”.

Ogunyemi said it is “perfectly in order” for the federal government to ask banks to pay the windfall tax.

The lawyer and public finance expert said the one-off levy will help the government to stabilise the economy.

“It is within the power of the government to make such laws and to direct such policies and actions as to ensure peace, good order and good government in Nigeria,” Ogunyemi said.

“Therefore, if Nigeria is in dire straits and some bodies or corporate organisations, that have been feeding fat on the system, especially when that feeding fat is not directly a function of their own productive energies, then it behoves the federal government to ensure a balancing of duties and responsibilities within the system.

“Such that a resource-deficient sector of the economy can benefit from the resource-surplus part through what is called economic stabilisation.

“So, to me, it is perfectly in order to amend the Finance Act 2020 in order to accommodate the collection of this one-off levy on the windfall that the banks have benefited from on foreign exchange transactions in the last one year.”

Ogunyemi said the one-off levy will help the government to stabilise the economy and redistribute wealth.