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Value Added Tax (VAT) remains a major revenue source for the Nigerian government, contributing to national development and state allocations.
However, the disparity between what states contribute and what they receive has sparked debates on fiscal equity.
Here’s a breakdown of the top 10 VAT-contributing states in August 2024 and what they benefitted from the revenue pool, according to a data released by the Federal Inland Revenue Service (FIRS).
1. Lagos State
Contributed: N249.77 billion
Allocated: N40.22 billion
As Nigeria’s commercial hub, Lagos continues to dominate VAT collections, contributing over half of the total pool. However, it receives only a fraction of what it generates.
2. Rivers State
Contributed: N70.54 billion
Allocated: N15.54 billion
Rivers, powered by its oil and gas sector, ranks second in VAT contributions but receives significantly less in allocation.
3. Oyo State
Contributed: N20.11 billion
Allocated: N9.46 billion
Oyo’s robust economy, driven by trade and manufacturing, places it third. Its allocation is almost half of its contribution.
4. Delta State
Contributed: N13.09 billion
Allocated: N7.72 billion
Delta’s allocation is also lower than its contribution.
Read also: Full list: VAT generated in 36 Nigerian states and FCT in August 2024
5. Bayelsa State
Contributed: N7.12 billion
Allocated: N5.58 billion
Bayelsa’s allocation also lower than its contribution.
6. Kano State
Contributed: N4.65 billion
Allocated: N9.71 billion
Kano, the largest contributor in northern Nigeria, benefits from an allocation far exceeding its VAT contributions.
7. Akwa Ibom State
Contributed: N4.49 billion
Allocated: N6.54 billion
Akwa Ibom, another oil-producing state, enjoys an allocation that surpasses its VAT contribution.
8. Anambra State
Contributed: N4.28 billion
Allocated: N6.66 billion
Anambra’s vibrant commercial activities contribute significantly to VAT, with its allocation exceeding its contribution.
9. Edo State
Contributed: N4.05 billion
Allocated: N6.08 billion
Edo receives more than it contributes, benefiting from federal revenue-sharing policies.
10. Ekiti State
Contributed: N3.66 billion
Allocated: N5.54 billion
Ekiti’s allocation, like others, outweighs its contribution, highlighting the redistributive nature of VAT revenues.
Key observations
-Lagos and Rivers dominate contributions but receive disproportionately less.
-States with lower contributions, like Kano, Anambra, and Ekiti, benefit significantly more than they contribute.
-The data highlights the redistribution mechanism of VAT aimed at balancing national development across states.
This disparity underscores ongoing debates about fiscal federalism and calls for a more equitable system to address developmental gaps.
