US Lawmakers Propose 5% Tax on Remittances, Threatening Nigeria’s Diaspora Inflows
By Kolawole Ojebisi
Potential Decline in US-Nigeria Remittances
The flow of remittances from Nigerians in the United States to their families back home may soon decline significantly. This follows the introduction of a draft bill by US lawmakers proposing a 5% excise tax on all international money transfers.
Details of the Proposed Bill
The bill, sponsored by Republican legislators, targets financial transfers from US residents to recipients abroad. Unveiled recently, the legislation states: “There is hereby imposed on any remittance transfer a tax equal to 5 percent of the amount of such transfer.”
The tax would be paid by senders and collected quarterly by the US Treasury Department. However, verified US citizens would be exempt and could claim the levy as a credit. The bill also excludes remittances sent through authorized providers.
Impact on Nigeria’s Economy
Nigeria, which heavily depends on diaspora remittances, faces a major challenge if this bill becomes law. Central Bank Governor Yemi Cardoso recently confirmed that Nigeria received $4.22 billion in remittances between January and October 2024 through International Money Transfer Operators (IMTOs). However, the exact portion from the US remains unspecified.
Broader US Immigration and Trade Policies
This proposal aligns with President Donald Trump’s stricter immigration and trade policies. Since his return to the White House in January, his administration has intensified measures affecting immigrants, including:
- Listing nearly two million undocumented immigrants for deportation.
- Attempting to end birthright citizenship for children of non-citizens (blocked by a federal court).
- Imposing a 14% tariff on Nigerian exports in March.
Despite these tensions, recent Geneva talks between the US and China suggest a possible easing of trade disputes.