The Senate on Tuesday directed its Committees on Banking, Insurance and other Financial Institutions and Finance to investigate non-remittance of taxes on bank deposits and dividends payment due to state governments.
The upper legislative chamber also mandated the committees to ensure that all withholding tax revenues on both bank deposits and dividends are recovered while they report back to the plenary within four weeks.
The resolution was sequel to a motion entitled: “Digitalisation,Automation of Collection and Remittance of Withholding Tax on Bank Deposits and Dividends Payments for Enhanced Internally Generated Revenue (IGR)of State Governments” .
The motion was sponsored by Sen. Uche Ekwunife (PDP-Anambra)
Leading debate on the motion, Ekwunife said: “It has been discovered that the Central Security Clearing System, (CSCS) and banks in Nigeria do not remit withholding tax on bank deposits and dividends to state government as and when due.”
The lawmaker, who also noted that most state governments were unable to pay salaries and meet their financial obligations due to poor and dwindling revenue.
She said a lot of money was being held by banks either in form of under remittance or non-remittance of withholding revenue to the state governments.
Ekwunife stressed the need for states to increase their internally generated revenue given the dwindling revenue from the Federation Account which had left various state governments with the task of formulating strategies to improve the revenue base of their states.
According to her, one of the major sources of revenue for state governments is the withholding tax on bank deposits and dividends which have been difficult for the states to track.
“The current practice is that both the banks and CSCS remit to state governments any amount they desire as it is difficult for the states to reconcile what amounts should be credited to them.
“Remittances without recourse to details is capable of and already eroding the revenue due to the state governments,” she said.
Ekwunife, however, said that the leakages with respect to remittance of withholding tax could be addressed using modern tax solutions and information technology.
She also stressed the need for proactive measures to ensure that all the withholding tax is remitted for enhanced revenue and in meeting the Federal Government’s drive and quest for increased revenue at all levels to meet the nation’s development needs.
Senators, in their contributions, also affirmed that automation of revenue collection, remittance of withholding tax remained the best way to block the leakages inherent in the payments due to state governments.