The Senate is investigating the non-remittance of taxes on bank deposits and dividends payments to state governments.
Consequently, it has directed its Committees on Banking, Insurance and other Financial Institutions, and Finance to jointly undertake the probe.
Specifically, the Senate said it had discovered that the Central Security & Clearing System (CSCS) and banks in the country do not remit withholding tax on bank deposits and dividends to state government as and when due.
This situation, the Senate insisted, has dwindled the internally generated revenue (IGR) of states which has further made payment of salaries a burden.
The Senate further mandated its committees to ensure that all withholding tax revenues on both bank deposits and dividends are recovered.
Senate President, Ahmad Lawan charged the committees to report back to plenary within four weeks.
The resolution followed a motion by Senator Uche Ekwunife (PDP Anambra Central).
Titled “Digitalisation/automation of collection and remittance of withholding tax on bank deposits and dividends payments for enhanced state government internally generated revenue, IGR”, the motion seeks to end the non-remittance of the taxes.
Leading debate, Ekwunife emphasised the need for states to increase their IGR which has become imperative given the dwindling revenue from the Federation Account.
She said that “most state governments are unable to pay salaries and meet their financial obligations as a result of poor and dwindling revenue.”
According to her, “one of the major sources of revenue for state governments is the withholding tax on bank deposits and dividends which has 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 stressed.
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 IGR at all levels of government to meet the nation’s developmental needs.