The distribution of value-added tax (VAT) revenue in Nigeria continues to stir controversy, as data from Agora Policy shows a significant disparity between states’ contributions to the VAT pool and their subsequent allocations.
The data, based on figures from the federation accounts
allocation committee (FAAC) for 2024, and published on Thursday by the
Abuja-based think tank, reignites debates about fairness, fiscal equity, and
the need for systemic reform.
Administered by the Federal Inland Revenue Service (FIRS),
VAT has been a critical source of non-oil revenue since its introduction in
1993 to replace the Sale Tax, with its sharing formula grabbing headlines
recently, as Taiwo Oyedele-led tax and fiscal policy committee proposed a
change to ensure fairness in the distribution.
The committee had proposed a VAT-sharing formula of 20 percent based on equality, 60 percent based on derivation, and 20 percent based on population.
However, the Nigeria Governors’ Forum (NGF) rejected the
committee’s suggestion and proposed a sharing formula of 50 percent based on
equality, 30 percent based on derivation, and 20 percent based on population —
which Oyedele said his committee has no objection to.
While implementation is projected to commence in July, the
current sharing formula of 50 percent based on equality, 30 percent based on
population and 20 percent based on derivation, creates a glaring imbalance.
LAGOS, RIVERS BEAR
THE BRUNT
Lagos state, Nigeria’s economic hub centre, contributed
N2.75 trillion to the VAT pool in 2024—nearly half of the total revenue
generated.
However, the state received just N460 billion in return as
VAT share, representing only 16.7 percent of its contribution.
Rivers state, another major contributor, generated N832
billion but received N186.6 billion from the VAT pool, accounting for 22.4 percent
of its input.
In contrast, states with significantly lower contributions
benefitted more from the redistribution.
For instance, Kano, which contributed N77.7 billion,
received N117.1 billion from the VAT pool, while Katsina, with a contribution
of just N22 billion, was allocated N85.6 billion.
Abia state contributed N8.68 billion but received N63.78
billion — a 734.8 percent return.
Similarly, Imo state contributed N4.38 billion but was
allocated N70.7 billion, reflecting a 1,613 percent return.
VAT DISTRIBUTION
ACROSS ZONES
Across the geopolitical zones, the south-west, led by Lagos,
contributed N3.11 trillion, accounting for the largest share of the VAT pool.
Despite its major contribution, the zone received only N849.71
billion, representing 27.4 percent of its contributions.
Also, the south-south contributed N1.08 trillion but was
allocated N543.49 billion— 50.3 percent of its contributions.
The north-west contributed N211.27 billion to the VAT pool
but received N574.32 billion in return, equating to 271.8 percent of its
contributions.
The north-east, despite contributing N174.50 billion,
received a significant N411.84 billion, amounting to 236 percent of its
contributions.
With a contribution of N154.54 billion, the north-central
zone received N408.66 billion, translating to 264.4 percent of its input.
The south-east contributed the least (N101.09 billion) but
received a hefty N341.46 billion — a 337.8 percent return on its contribution.
Across the regions in Nigeria, southern states, driven by
economic hubs like Lagos and Rivers, contributed N4.28 trillion to the VAT pool
but received only N1.73 trillion, representing 40.5 percent of their
contributions.
In sharp contrast, northern states contributed N540.31
billion yet received N1.39 trillion, an astonishing 258.2 percent return.
Here is how much states contributed to the VAT pool and
their FAAC allocation in 2024:
States | Contribution | Received | % Received over contributed |
LAGOS | N2,748,665,069,782.76 | N460,114,236,434.33 | 16.74 |
RIVERS | N832,688,064,654.31 | N186,656,071,024.28 | 22.42 |
OYO | N272,411,954,052.28 | N116,829,092,280.14 | 42.89 |
KANO | N77,761,860,423.78 | N117,186,032,787.88 | 150.70 |
DELTA | N73,394,396,800.90 | N80,733,654,051.96 | 110.00 |
BAYELSA | N64,661,168,717.61 | N63,420,883,509.10 | 98.08 |
EDO | N53,546,613,686.53 | N72,330,445,667.65 | 135.08 |
ANAMBRA | N47,529,541,587.55 | N78,003,239,449.32 | 164.12 |
AKWA IBOM | N46,932,436,075.61 | N76,097,364,709.81 | 162.14 |
ADAMAWA | N42,012,111,298.36 | N70,414,117,537.30 | 167.60 |
BORNO | N35,286,944,597.86 | N76,154,668,063.95 | 215.82 |
NIGER | N34,841,993,907.07 | N74,787,450,124.92 | 214.65 |
TARABA | N32,365,269,965.30 | N63,240,998,374.15 | 195.40 |
KWARA | N31,508,114,508.92 | N63,632,938,056.02 | 201.96 |
KADUNA | N30,302,403,947.99 | N88,500,214,722.26 | 292.06 |
EKITI | N29,576,981,468.02 | N63,470,749,066.70 | 214.60 |
JIGAWA | N28,540,036,073.60 | N76,679,280,748.36 | 268.67 |
BENUE | N26,595,295,560.44 | N75,474,590,397.58 | 283.79 |
OGUN | N26,156,976,489.99 | N72,104,176,520.42 | 275.66 |
SOKOTO | N25,981,257,188.75 | N71,938,907,517.52 | 276.89 |
GOMBE | N25,445,755,074.50 | N62,774,668,097.61 | 246.70 |
EBONYI | N25,107,178,060.92 | 61,431,616,027.96 | 244.68 |
KOGI | N23,605,705,739.45 | N68,739,837,797.79 | 291.20 |
PLATEAU | N22,100,871,516.06 | N67,868,060,371.87 | 307.08 |
KATSINA | N22,080,740,524.48 | N85,587,835,727.97 | 387.61 |
YOBE | N19,793,062,527.69 | N61,778,309,452.52 | 312.12 |
BAUCHI | N19,597,766,555.00 | N77,472,243,211.90 | 395.31 |
ZAMFARA | N17,827,344,518.62 | N67,871,376,495.76 | 380.72 |
NASARAWA | N15,891,934,905.05 | N58,157,189,562.56 | 365.95 |
ENUGU | N15,396,554,017.72 | N67,538,962,223.54 | 438.66 |
OSUN | N14,794,902,567.80 | N68,619,532,407.63 | 463.81 |
ONDO | N13,802,062,592.84 | N68,570,293,215.49 | 496.81 |
CROSS RIVER | N9,358,220,471.69 | N64,248,333,841.31 | 686.54 |
KEBBI | N8,773,869,718.68 | N66,553,295,316.50 | 758.54 |
ABIA | N8,680,963,229.26 | N63,783,987,557.73 | 734.76 |
IMO | N4,383,557,406.46 | N70,700,422,604.48 | 1,612.85 |
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