In 2014, the federal government announced the elimination of stamp duty and VAT from secondary stock market transactions, but recent communication with shareholders revealed that both charges still apply. In this interview with Financial Vanguard, Olufemi Timothy, President, Renaissance Shareholders’ Association, said the development shows that SEC is not alive to its responsibilities as the apex regulator of the Nigerian capital market.
By Nkiruka Nnorom
THREE years ago, the former Minister of Finance, Mrs Ngozi Oknojo-Iweala, announced the removal of stamp duty and VAT from secondary stock market transactions, but till now, stockbrokers still include them in their charges. As an investor in the market, how do you view the continuous collection of stamp duty?
When governments don’t maintain and sustain their policies, it is a thing of displeasure and it affects confidence in the market and even in the government itself. You see, when an investor doesn’t trust government’s policies, he may be reluctant to invest in that environment.
Minister of finance announced elimination of stamp duty, but the stockbrokers are still collecting it, it is disheartening and it is the fault of the apex regulator who is supposed to regulate and make sure that all stockbrokers who are registered under the Securities and Exchange Commission, SEC, obey government policies. So, it is not good enough and all these things, in the end, will affect investors’ confidence. If you buy a million shares and stamp duty is collected, it would amount to huge sum of money which would have been added to buy more shares.
They know that by removing stamp duty, it will assist investors to reduce cost of buying shares, but when the policy is not implemented, the cost of investing in the Nigeria capital market remains high. Government, by its pronouncement tried to assist but stockbrokers, who are registered with SEC are not helping matters and these are some of the things we see in the market where you see operators violate government orders.
Your response sounds like an indictment on the SEC, but for me, if the government had gone beyond pronouncement to implementation, the stockbrokers would have keyed in
Since the minister of finance then said that henceforth, stamp duty should be removed, it is a federal government pronouncement. Do you still need to get circular before you start implementation? After the pronouncement, it is left for the SEC to implement; the minister of finance cannot come to the capital market to implement and that is why I am putting the blame on the Commission, which is the apex regulator of the capital market. It is its duty to make sure that government policies regarding the capital market are implemented. So, if the SEC is silent about this, it is not good enough.
Do you think this continuous collection of stamp duty supports the federal government’s campaign of growing and restoring confidence in the market?
It does not support that position. Government is trying to make sure that they reduce cost in the market so that more people can invest and grow the capital market, but the operators are not looking in that direction. So, for me, the stockbrokers are working contrary to government’s intentions.
SEC is proposing reduction in cost of transaction both in the primary and secondary market, but with regards to what is happening with stamp duty, do you think this would be achieved?
The truth is that they cannot achieve it because stamp duty and VAT are part of the costs they want to reduce. They have to look at it holistically and make sure that every cost that is supposed to be reduced is reduced. For instance, if you want to reduce the cost of transaction from 0.1 per cent to 0.05 per cent and you discover that it is not implemented, that means that you are moving nowhere; nothing is achieved.