Nigerians Face Rising Costs as U.S. Plans 5% Levy on Money Transfers
A new bill introduced by U.S. House Republicans is sparking concern among immigrant communities, including Nigerians, as it seeks to impose a 5 percent excise tax on all remittances sent abroad by non-citizens.
The draft legislation, released on Monday, proposes a sweeping measure that would apply to payments made by U.S. residents to recipients in foreign nations. While verified U.S. citizens would be exempt and eligible for a tax credit, the bill places the financial burden squarely on millions of immigrant families who rely on money transfers to support relatives in their home countries.
“There is hereby imposed on any remittance transfer a tax equal to 5 per cent of the amount of such transfer,” the bill states. The proposed tax would be collected from the sender and remitted quarterly to the Secretary of the Treasury.
The bill includes an exemption clause for remittances handled by “qualified remittance transfer providers” when the sender is a “verified United States sender,” effectively shielding citizens from the financial impact but leaving many immigrants exposed.
The proposal could have direct consequences for countries like Nigeria, where remittance inflows are a key source of foreign exchange. According to Olayemi Cardoso, Governor of the Central Bank of Nigeria (CBN), Nigerians received $4.22 billion in remittances via international money transfer operators (IMTOS) between January and October 2024. While the CBN did not disclose how much of that came from the U.S., Nigerian households heavily depend on remittances to cover essentials like education, healthcare, and food.
The tax proposal arrives amid a wave of policy shifts from Washington, many of which have targeted immigration and international trade. Earlier this year, nearly two million undocumented immigrants were flagged for deportation by U.S. Immigration and Customs Enforcement (ICE). Former President Donald Trump, who remains a dominant force in the Republican Party, has also floated ending birthright citizenship for children born to undocumented immigrants.
On the economic front, the U.S. administration has aggressively pursued protectionist trade measures. In March, it slapped a 14 per cent tariff on Nigerian imports and escalated a trade war with China by raising tariffs to 125 per cent. However, tensions eased on May 12 when the U.S. and China reached a breakthrough agreement to cut tariffs dramatically, reducing U.S. tariffs on Chinese goods from 145 per cent to 30 per cent, and Chinese tariffs on American exports from 125 per cent to 10 per cent.
