One university student is terrified of the effects a new remittance tax that will go into effect in the new year will have on her family in Nigeria.
Second-generation Nigerian American Edidiong Chrys stated that she believes the 1% tax included in President Donald Trump’s large, attractive package will have a direct impact on the money she sends abroad. Anyone sending money outside from the United States will be subject to this levy.
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According to her, we frequently send money home to help loved ones in need, such as our elderly, school-age children, infants, and others.
According to Chrys, 38, part of the money sent home has helped her family’s new parents with expenses like food and doctor’s appointments. Her uncle, who works and has to support his five school-age daughters, also benefits from the money. According to Chrys, he and his spouse work, but it’s still insufficient to support everything that needs to be done in the home.
Additionally, when Chrys visited her grandma in January, she was 80 years old and suffering from back problems.
She stated that we are covering the cost of the live-in nurse to assist her throughout the week. We need to cover that extra cost for her in order to prevent her from going above and beyond.
Anyone in the United States who remits money to their home nations is subject to the tax. The World Bank estimates that remittances from the United States came to $98 billion in 2023. Chrys is one of the 56 billion dollars in remittances that people from all over the world sent to sub-Saharan Africa last year. She even admitted that she sends money to her family and friends more than fifty times a year.
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In light of the recent cutback in U.S. aid, the tax was cited as yet another financial setback for several countries in a study released last month by the Center for Global Development, a nonpartisan think tank dedicated to decreasing global poverty through economic research.
Liberia is heavily reliant on remittances and foreign aid. According to the research, remittances tripled Liberia’s bilateral foreign aid in 2023, and the United States provided 25% of the nation’s foreign aid.
Hilda Suka-Mafudze, the departing ambassador of the African Union to the United States, stated that impeding such funding could undo the progress made in financial inclusion and development throughout the African continent.
“To impose this tax is just another obstacle to the U.S. effort to collaborate with our partners on the continent,” stated Witney Schneidman, a nonresident senior fellow with the Africa Growth Initiative at the Brookings Institution’s Global Economy and Development program.
It doesn’t change anything. According to him, it’s just one more barrier to collaboration and development.
Schneidman, who was previously the Clinton administration’s deputy assistant secretary of state for African affairs, criticized the Trump administration for erecting obstacles rather than fostering understanding.
“It’s just building a wall,” he added, adding the immigration restrictions, the expiration of USAID, and the [African Growth and Opportunity Act] AGOA. The United States is erecting a wall between itself and Africa, as well as between itself and the rest of the globe.
Suka-Mafudze, whose attention will shift to the Southern African Development Community region, stated that preventing remittances is a human issue in addition to harming diplomatic relations because diaspora remittances are vital for millions of African families and frequently cover necessities like food, school fees, medical care, and many other things. And it is incredibly unfair to tax that.
According to Chrys, some people are already struggling to make ends meet because to the financial strain of sending money home.
According to Chrys, some people are not earning enough money to try to support their families back home. Sometimes I waste the money from my refund check when I do have the opportunity to send money home.
To reverse the effects of the tax, Democratic Representatives Sheila Cherfilus-McCormick of Florida and Jonathan L. Jackson of Illinois sponsored new legislation known as the African Diaspora Investment and Development Act, or AIDA. Among other things, it would increase the transparency of money transfers.
Supporting the bill, Suka-Mafudze cautions that the new fee may encourage people to use unofficial or unregulated routes, which would increase transaction risk and reduce transparency.
A remittance tax, according to Cherfilus-McCormick, the sole Haitian American now serving in Congress, would unjustly burden families who are already finding it difficult to provide for their loved ones abroad.
In a statement, she added, “I vehemently oppose any attempt to tax remittances and will continue to fight for policies that protect immigrant and diaspora communities.” In order to create long-lasting relationships and boost economic growth, H.R. 4586 AIDA plans to go in the opposite direction and instead concentrate on providing incentives and utilizing the roughly $100 billion that Haitian, African, and Caribbean Americans send home annually.
According to Schneidman, as the majority of remittances are made from one family to another, the levy may have an effect on families, health care, and education.
Those who send the money are most affected by this reality since they have direct experience with how even modest sums may have a significant impact.
In the United States, one may think, “Oh, that’s nothing.” “Chrys said.” However, in Nigeria, every penny matters, thus it’s crucial.
