U.S. Proposal to Tax Remittances: Implications for Nigerian Families and Global Economic Relations Introduction A new bill proposed by U.S. House Republicans seeks to impose a 5% excise tax on remittances sent abroad by foreign residents in the United States. This legislation, if enacted, could significantly impact immigrant communities, particularly those from high remittance-dependent countries such as Nigeria. The Core of the Bill According to the draft bill released on Monday, the tax applies to "any remittance transfer" made by a sender who is not a “verified United States sender.” However, remitters who are verified U.S. citizens may claim the tax as a credit, effectively exempting them. The proposal stipulates that: “There is hereby imposed on any remittance transfer a tax equal to 5 percent of the amount of such transfer… [which] shall be paid by the sender... and remitted quarterly to the Secretary [of the Treasury].” This would place a direct burden on foreign-born residents, including lawful permanent residents, asylum seekers, and undocumented migrants. Nigeria’s Exposure: The Diaspora Remittance Context Nigeria, Africa’s largest economy, is among the top recipients of remittances globally. According to Central Bank of Nigeria (CBN) Governor Olayemi Cardoso, Nigeria received $4.22 billion in diaspora remittances through international money transfer operators (IMTOs) between January and October 2024. While the CBN did not disaggregate this figure by source country, it is widely acknowledged that a significant portion of Nigeria’s remittances originates from the U.S., where a large Nigerian diaspora community resides. Potential Implications for Nigerian Families If passed, this tax could have cascading effects on Nigerian households that rely heavily on remittance inflows for basic needs, education, and small business capital. A 5% tax on every remitted dollar would erode the net value received by beneficiaries and may discourage formal remittance channels, pushing senders toward informal or unregulated options — undermining financial transparency and compliance. Policy Rationale and Immigration Undercurrents The proposed tax is not occurring in isolation. It aligns with recent hardline stances taken by the U.S. government on immigration and trade: Immigration Clampdown: U.S. Immigration and Customs Enforcement (ICE) identified nearly two million undocumented immigrants for deportation in early 2025. Birthright Citizenship: U.S. President Donald Trump reiterated plans to revoke birthright citizenship for children born to undocumented immigrants. Trade Tensions and Tariffs: The U.S. imposed a 14% tariff on Nigerian exports and hiked tariffs on Chinese goods from 104% to 125% before later agreeing to reduce them to 30% as part of a reciprocal deal with China. These developments suggest a broader policy direction focused on economic nationalism, enhanced border controls, and revenue maximization — with migrants and foreign economies bearing the brunt. Economic and Diplomatic Repercussions If implemented, the remittance tax could: Deter legal financial transfers, affecting foreign exchange liquidity in recipient countries like Nigeria. Fuel tension in U.S.-Africa relations, particularly given the continent's role as a rising partner in trade and investment under frameworks like the African Continental Free Trade Area (AfCFTA). Trigger reciprocal policies from affected countries, including restrictions on U.S. firms or financial institutions operating abroad. Conclusion: What Should Stakeholders Do? For policymakers in Nigeria and similar remittance-reliant countries, proactive engagement with U.S. counterparts through diplomatic channels is essential. African governments may need to: Enhance financial literacy among diaspora communities on alternative remittance strategies. Strengthen domestic remittance infrastructure to reduce dependency on foreign transfer systems. Form strategic alliances to challenge policies with extraterritorial impacts that undermine international cooperation and development goals. Meanwhile, the Nigerian diaspora should closely monitor the legislative process, advocate through consular and community channels, and explore compliant ways to minimize the impact on family remittances. Olatunji Abdulrazaq CNA, ACTI, ACIArb(UK) Founder/CEO, Taxmobile.Online