Unremitted tax funds

The revelation that some banks, ministries, agencies and departments of the Federal Government are neck-deep in collecting taxes on behalf of government without remitting them to the appropriate authorities is simply scandalous. It is a betrayal of trust. It is unethical, wrong and amounts to economic sabotage.

According to the Minister of State for Finance, Mr Remi Babalola, an astonishing N298 billion remains unpaid by these banks and ministries into government coffers. A breakdown of the withheld tax funds include N260 billion owed by government agencies and some private organizations, and another $260 million in Withholding Tax (WHT), Pay as You Earn (PAYE), and Value Added Tax (VAT).

Clearly, the amount involved is a dizzying sum that seems to have fallen into a black hole. Coming at a time when government sources of revenue are dwindling, especially from oil, the news of these withheld tax funds is alarming.

It also shows the kind of leakages that exist in our tax collection system. What these banks and government agencies have done calls for appropriate penalty and a genuine effort towards reforming our country’s tax system. The penalty should begin with the banks that may have helped themselves at the detriment of government which appointed them based on confidence, openness and transparency.

Now, they have eroded that trust which is essential in a bank/client relationship. Without doubt, the offence is a serious breach that has far-reaching implications. It must be visited with appropriate punitive sanctions. We recommend that the affected banks remit forthwith into government coffers the withheld sums with interest at prevailing market rate. Such underhand practice should be thoroughly investigated to avoid future occurrence.

For the banks involved in this revolving door of greed, government should cancel whatever contractual agreements it entered into with them. There is one telling lesson in all these: What the accused banks have done should be an eye-opener to government, and a clarion call on the need to enhance government revenue through broadening of its tax base.

But effective surveillance and monitoring is imperative to checkmate such black holes. This is the time to be more vigilant on revenue collection mechanism. Henceforth, government should stipulate adequate sanctions against offenders who fail to remit tax funds within a specified time.

In this direction, there is need to build realistic tax compliance measures and frameworks on how to improve revenue management. What the banks and ministries of government have done in withholding these tax funds is a pointer that old measures have failed and new, leak-proof ones have become inevitable.
We recommend that in addition to the above-mentioned measures, government should dispatch special tax examiners and auditors to the affected banks to ensure quick and accurate remittance of the tax funds.

But these agencies cannot be effective in the discharge of this enormous responsibility if they are not well monitored and insulated from red tapism. Therefore, we urge the supervising ministry, the Ministry of Finance, to clearly spell out their mandates and give them the needed support, through professional skills and ethics. If the current efforts to revamp the economy are to yield the desired results, all loose ends of revenue collection should be plugged.