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Ofilispeaks: Stamp Duty – A Regressive Tax On The Poor?



Okechukwu OfiliThe new Federal Government stamp duty in my opinion is poorly structured and might end up hurting the very same Economy it claims to save.

While the Federal Government has focused largely on the financial benefits to themselves N66.1 Billion, they have basically ignored the detrimental impact to its citizens … especially the poor.

Per the Central Bank of Nigeria  circular, the stamp duty charge is described as follows:

For electronic transfer or deposits above N1000.00 into any account (excluding savings account), they must be charged N50.00 as stamp duty.

It essentially is a TAX on our nation’s poor. Because the poor will suffer, not the middle class or the upper class, but the poor. Here’s why:

The N50.00 charge is per transaction, regardless of the amount. Focus on the word “regardless.”

Because “regardless” means that no matter what amount (as long as it is above N1000.00) is deposited in your account you still get charged the same N50.00 as the person that gets a N1,000,000.00 deposit.

To understand this better imagine that you get N20,000.00 deposited in your account you will get charged N50, which results in a 0.25% tax rate (50/20000*100) and if you receive N1000.00 you still get charged the same exact N50, but instead of 0.25% tax rate your stamp duty tax rate will be a much higher 5% … a tax rate difference of 4.75%!

This means that people receiving lower deposits (the lower class in most cases) in their accounts will see a higher percentage of their monies taxed. In Economic terms, this is simply known as a form of regressive tax which is defined as…
A tax imposed in such a manner that the tax rate increases as the amount subject to taxation decreases.

This sort of reverse tax, where the poor suffers more relative to the rich is ill-advised and unfair. Because the poor is not who put us in this situation, it is the upper class.

Which takes me back to stamp duties.

Stamp duty is a tax that was originally levied on physical documents. Today it is typically levied across the globe on special documents/transactions such as stocks, real estate, etc. But it is rarely applied on everyday micro-transactions, as you can see below:

  1. Singapore: Stamp duty applies to documents relating to immovable property, stocks and shares.
  2. USA: Stamp tax, is collected for registration of mortgage or deed of trust.
  3. Sweden: Stamp duty collected on property deeds, at 1.5% of the purchase value.
  4. Hong Kong: Stamp duty applies to immovable property, stocks and shares.
  5. Denmark: Stamp duties on insurance policies. Stamp duties on land registration
  6. Ireland: Stamp duty on Mortgages and Leases.

In all the examples above, the stamp duties are levied on primarily middle class to upper class transactions such as real estate and the stock market.

And in most cases there is a numerical limit to shield lower income earners, for example in the UK “first-time buyers purchasing a property under £250,000 have their stamp duty waived for two years.” while in Ireland “the transfer of stocks and marketable securities is taxed at 1% if over €1,000.” But in Nigeria, we are taxing for as low as $3.33 to $4.00 and for everyday transactions!

And let’s not forget that stamp duty will all but reverse the efforts at getting Nigeria to CASHLESS society. This is because people the very same ones we were trying to move to CASHLESS will be discouraged from putting their money in any bank account, because of the fear of stamp duties. Instead people will require that their money be given to them in CASH.

But that’s not the only reason I find fault with this stamp duty.

As if to make us feel better, the CBN stated in its circular that:

For the avoidance of doubt, any form of withdrawals or transfers from SAVINGS accounts are exempted from the imposition of Stamp Duties.”

But if there is anything worse than Regressive Taxation in an economy sliding towards a recession, then it is making it more beneficial to SAVE than to SPEND. Which is what the government will end up doing with the above CBN statement. Here’s why:

To avoid stamp duties people will end up putting money in their SAVINGS accounts versus CURRENT account (commonsense). And when this begins to happen, the CBN government will realize one of the CRAZIEST things about our banking system. And that is that the SAVINGS account is basically a CURRENT account with benefits!

And when they (CBN) realize that people are dodging stamp duties via savings account they will start to add spending restrictions on the SAVINGS accounts. Resulting in less and less spending.

And it will be ironic, because the Government has stated that its strategy to fight the pending recession is to spend its way out of it. So why would you create a rule that slows down spending amongst its citizens?

All in all I believe the stamp duty tax to be a poorly thought out mechanism for the government to generate funds because it punishes the very same people it is supposed to help and also stagnates the Economy.

The question is, will it last longer than the banning of FOREX cash deposits? Only time will tell, but I am afraid we don’t really have much time left.


Okechukwu Ofili is a trouble maker, the author of 4 books and speaks at organizations that are tired of hearing the same old stuff and want the truth. He is also the founder of and blogs daily at You can follow him on Twitter or stalk him on Instagram You can also read his funny books on konga or okadabooks


  1. @edDREAMZ

    February 1, 2016 at 3:46 pm


  2. Commenter

    February 1, 2016 at 3:47 pm

    Wouldn’t the tax rate difference between transacting 20k and 1k be 4.75%?

    • Okechukwu Ofili

      February 1, 2016 at 5:05 pm

      Very correct. That’s an error, we’ll work to update in the article. It should be 4.75% and not 4.25%.

  3. fleur

    February 1, 2016 at 4:36 pm

    Ofili, God bless your mouth. These are the kind of critical thinking pieces that we need to have up in Aso Rock and among the populace – partisan politics aside. You want to alleviate the plight of the poor. Yet you impose a tax system that is not called a tax system, which by the way adds more nails to their rotted coffins. This is tragic. The average Nigerian lives in acute poverty [ura mbelema inmy grandma’s concentrated Owerri] and their plight has worsened due to the global oil glut and our historical lack of planning for our people. We also invested a lot of resources and rightfully so, in moving our society closer to a cashless society for many reasons. Whether it was a basis for that change or not, safety is a benefit that accrued to many. Traders no longer have to carry oodles of cash with them in an ever increasingly dangerous society. Another benefit is that we no longer have to carry Ghana must go bags for business. That is now a choice, not a necessity. We also no longer have to spend hours counting [and miscounting] heavily wrinkled and dirty notes that have been in all kinds of armpits and bras. Now, many have become dependent on bank transactions for their businesses, daily lives et al., and your government elected by our thumb prints turns around and stomps on our hustle because you are desperate to raise cash. How far? So if I transfer #500 million, I pay #50. If I transfer #1000, I pay #50. This is a regressive tax on the poor, who are over-represented in the lower end of the transaction value distribution. Ofili is right in this regard. We are asking the poor to rectify the economic problems orchestrated by the extremely wealthy who are wealthy largely because of stolen sovereign wealth. Was this your intent PMB? Whose bright idea was this on your team?
    You were elected into office by people who will pay this tax. They elected you because there was the “APC song in the air” that was so pervasive about positive change. Not negative change. People once again had stars in their eyes and damned aspirations – please let a poor man dream for a day! Unfortunately, their dreams were premature because the timeline of their expectations was gravely misaligned with how things work. Nobody cared to temper their expectations with a simple explanation or discourse but, that is another story for another day. However, what they did not and should not expect is an economic flogging orchestrated by thine own hands. Do not forget the electorate. It is the salaried government worker [aka “evil servant” since working for the Nigerian government at any time in our history since the 1980s is the equivalent of working in hell for the devil himself] who needs that #50 or they cannot take okada to work. It is the tomato seller who needs the #50 to complete the money for malaria medicine for her ailing child. #50 is the margin/tipping point for many of your voters. Don’t let them down.

  4. M&

    February 1, 2016 at 4:48 pm

    Some questions and answers before we make conclusions of the effects on the poor:
    1) How many Nigerian adults operate bank accounts or have access to banking services, and how many are unbanked?
    Ans: Only about 30% of Nigerian adults are ‘banked’ i.e. about 29million. The rest are unbanked, almost 60 million Nigerian adults. Guess who makes up this unbanked segment? My guess…The Poor.

    2) Out of those with access to financial services, how many operate current/other accounts and how many savings accounts?
    Ans: a whooping 92% make use of Savings accounts. 64% of the population make use of ATMs/Debit cards and 37% have current accounts. My guess is that it’s poor who will make use of savings accounts the most, and even a large number of middle income adults.

    What I’m saying is that I think the new policy is not targeted at ‘the poor’ but more at businesses. Some more research is required before the conclusions.
    *Try EFInA, try Financial Inclusion.
    I also don’t think that the term ‘stamp duty’ is appropriate either.

    • Okechukwu Ofili

      February 1, 2016 at 5:18 pm

      Valid points.

      Note however, that one thing does not change and that is the fact that STAMP DUTY is a Regressive form of Taxation.

      What you are arguing is that the number of “poor” people without bank accounts is high, I can’t dispute you there, actually I think it is even higher. That said, you still have a large number of low income Nigerians with bank accounts that will be adversely affected by STAMP DUTIES.

      And the worst part is that it takes Nigeria several steps back on its journey towards a CASHLESS society. Because as you ascribed above the lower income people without bank accounts have no incentive to open up new banks.

      So yes, the policy might not be targeted at the poor, but it will end up affecting them and our Economy together. But let’s wait and see how it plays out.

  5. UGO

    February 1, 2016 at 5:02 pm

    Just to point out to you @OfiliSpeaks, Nigeria also requires stamp duties on immovable properties.

    • Okechukwu Ofili

      February 1, 2016 at 5:20 pm

      And that is fine. But I don’t think it should be applied to micro-everyday transactions.

  6. Nigerian

    February 1, 2016 at 6:17 pm

    Enlightening… Unfortunately an average Nigerian is too busy dancing shoki to give a rip. Those affected may not even be aware of this new rule God help us

    • Okechukwu Ofili

      February 2, 2016 at 2:29 am

      I think people are slowly paying attention as the new policies directly affects their bank accounts more and more.

  7. katty Ray

    February 1, 2016 at 9:14 pm

    Nice piece unfortunately this govt has shown that it doesn’t have much to offer in terms of progression. All our hopes are beginning to dash…[email protected]…..yes nah…dancing shoki or reading and commenting to gossip. Posts like this wouldn’t be taken seriously but should it be posts on toolz wedding and the two brothers then you’ll understand Nigerians can blow grammar, imagine the Unimaginable and forecast the future. I hail naija!

  8. Taiwo Ojewande

    February 2, 2016 at 12:27 am

    Mr Ofili, am Taiwo Ojewande, a broadcaster with Osun State Broadcasting Corporation, Osogbo. I read your article, very interesting. I will appreciate it if you can speak with us through phone on our our program ‘AM CAFE’ today.
    If will be highly appreciated if you can honour us with this. If you will oblige us, we shall be delighted if you can send your number to my mail, [email protected] or text your number to 0803-360-8399, so that I can call you.
    Greatful for your acceptance.

  9. Okechukwu Ofili

    February 2, 2016 at 2:28 am

    I think people are slowly paying attention as the new policies directly affects their bank accounts more and more.

  10. nnenne

    February 2, 2016 at 2:51 am

    At harsh economic times like this, the best policies are those that encourage spending because you want to keep money in circulation.
    The non- taxation of savings accounts while taxing current accounts, simply discourages spending and impacts on the cashless system.
    You are right, Ofili!!!
    Bad economic policies.

  11. Jamce

    February 2, 2016 at 5:56 am

    Great critical thinking. Let everyone be wise to the antics of these loonies in government and government agencies who are only interested in exploiting the poor masses of Nigeria. It is also time for the tax laws to be reviewed and tax reliefs brought to up the inflationary trends over the years.

    On another note the illegal COMMISSION ON TURNOVER (COT) through which the banking system have exploited and milked the nation in collecting cheap and unearned revenue since sometime in 1987 has been REBRANDED “ACCOUNT MAINTENANCE FEE” and reduced to N1 per mille as against the N3 per mille. It was originally N5 per mille when the entire banking system conspired to move it from N3 per mille to N5 per mille. The former CBN Governor, Sanusi sought to abolish the illegal COT starting with its reduction to N3 mille. Upon the appointment of Mr. Godwin Emefiele, I knew clearly that the abolition will not take place because it would be against the interest of his masters who had benefit immensely from COT charges over the years.

    Mr. Godwin Emefiele, we are not fooled by the REBRANDING or RECHRISTENING of COT as AMF. The Banks are already charging AMF of about N100 per month. There is no where in world where COT had been practised except in Nigeria. Banking is essentially deposit and withdrawal of funds which should not attract any charge as the Bank is entitled to utilise the funds for its core business of lending and getting interest margin. Everything other service may be charged a fee. But the simple deposit and withdrawal of funds cannot be subject to any fee or charge. It is this COT that has virtually ruined proper banking business in Nigeria and reduced Nigerian banks to glorified ESUSU merchants like the ones in our various markets.

    • Okechukwu Ofili

      February 2, 2016 at 10:54 am

      Nice observation. I thought I was the only one that saw it.

      They basically took COT away and we praised them but by the time we woke up they had brought maintenance fees and stamp duties as the re-branded COT.

  12. Jamce

    February 2, 2016 at 6:00 am

    *…. benefited immensely….

    *Every other service ….

  13. Medo

    February 16, 2016 at 11:39 am

    Ofili, current account no be for poor man naa. it is supposed to be a business account so therefore the tax is basically aimed at the mid to upper class and of course a current account is rightly a business account.

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