Banks Rob FG Of N1trn Revenue Through Manual Stamp Duty Collection — Suswam

Senator Gabriel Suswam representing Benue North East, in this interview by Osaretin Osadebamwen, suggests how the Federal Government can reduce the over N5trillion deficit in the proposed 2021 budget.

WHAT are the feelers so far from your committee’s engagement with Government-owned Enterprise (GOEs) on securing revenue to fund the 2021 budget with lesser deficits?

You can recall from the discussions that have been going on in the past few days since we started the interaction with revenue agencies on the Medium Term Expenditure Framework (MTEF). The worry of the National Assembly is on the deficit on the proposed 2021 budget. That deficit is very high. What we are trying to do in the National Assembly is to be able to look at revenue sources and de-escalate the deficit. How do we do that? We need more funds; we need more money to reduce the deficit. When you have a deficit budget as high as what we have with very little financing items that are also highly speculative, it becomes a big problem.

So, what we are trying to do is to look at revenue-generating agencies that generate these revenues and spend about 60 to 70 percent of the revenue. As you observed when they were asked to provide details of the expenses, they were unable to justifiably defend what they had done with such money. We want a situation where we will be able to critically assess the revenue that they generated and see areas where we will be able to reduce such frivolous expenditures and add such funds to the proposed 2021 budget to reduce the deficit of the budget. So far, we have discovered a lot and we hope that at the end of the day when the budget is eventually passed by the National Assembly, the deficit would have substantially been reduced.

 You argued that the N500billion proposal was insignificant to real stamp duty tax being projected in the 2021 budget proposals. What informed the position? How did you arrive at concluding that it can be more than N500 billion? 

Stamp duties are charges that are charged on transactions on legal documents above N10,000, as well as any transaction that you make in the bank that is up to N10,000 or above qualified to be taxed N50 as the stamp duty charge. Now if we take the aggregate transactions that have gone on, especially after listening to what the chairman of the Federal Inland Revenue Commission, Mohammed Nami said on the volume of 300, 000 transactions that took place in 2019, when you multiply those volumes of transactions by N50, your guess is as good as mine. Now, if you are collecting 100 percent for 2020, you would have over N3 trillion. If we collect it by 75 percent, you would have over N2 trillion. However, we said for purposes of this year, let them at least collect 50 percent of stamp duty, and that gives them N1.5 trillion. So, the N500 billion is grossly understated and every person knows it. They know it.

Another issue is that most of the banks are not remitting this money to the government. What stopped them from deploying the technology that once you do a transaction above 10,000, the stamp duty rate of N50 hits straight at the Central Bank of Nigeria (CBN) account? Why are they doing manual collection? With technology, they can achieve it. Every bank has the technology that can be deployed for every transaction that is above N10,000 to have the stamp duty charged automatically and it goes straight into a dedicated account with the CBN.

If you do that, you can generate even more than the N1.5 trillion we are talking about. That would drastically reduce the N5trillion deficit in the 2021 budget by N1.5trillion. You can even generate more than that. They know it and we know it. Therefore, we need to concentrate on that. The volume of online transactions, especially with the advent of the COVID-19, which has created the new normal, every transaction is now basically done through transfer. You can see the basis for which I was arguing that those people grossly understated what they can generate for the 2021 budget.

With this reservation that banks are not remitting the whole money they collected by a manual process that could be replaced with technology to improve the revenue,  would you advocate a legal instrument through legislative intervention? 

Of course sure! In fact, that was what the chairman of the committee was saying that when the budget is coming, the executive should submit the 2021 budget proposal and a finance bill seeking legislation to compel banks to use technology to collect stamp duties and remit the same directly to the CBN dedicated account. In the 2019 proposal, we domicile all the collection of stamp duty with the Federal Inland Revenue. The CBN is still holding on to part of that money and they are under-declaring what they should declare.

We want a single agency to be saddled with revenue collection, which is Federal Inland Revenue Service should take total charge and responsibility for this collection. We are also asking them to in the financial bill of 2021, they should bring the proposed amendment so that we can do an amendment and make sure that the bank’s complied with total remittance of the stamp duties; the majority of the banks are not remitting that money and we are losing a lot of revenue. Stamp duties alone should be able to finance 50 percent of the budget.

Is the Senate optimistic that the 60 GOEs and revenue-generating agencies will generate funds necessary to bridge the funding gaps observed in the proposed 2021 budget?

They might not but they would substantially reduce the deficit which is the concern of the Senate. You listened to one of the agencies, where they made a projection of generating N75 billion and they only gave N25 billion to the Federal Government. What is going on with the N50 billion left with them? What are they doing with the N50 billion after all expenditures? Why can’t they take N25 billion and give the Federal Government N50 billion? There are a lot of them like that. For instance the NNPC, they don’t even bring their projects here. You also listen to NBC who willingly said that what the Federal Government gives them is N15 million. Meanwhile, they generate about N3 billion besides the wage bill of about N600million. What do you do with the N2.4 billion? They said that they remitted N1 billion to the Consolidated Revenue Savings account. So, what do you do with the N1.4 billion? They could not answer that question. If we mop up such monies, the deficit for this year would be substantially reduced and we are determined to do that.

Source: Nigerian Tribune Online