Southern Nigeria generated N387.06b VAT, got only N149.09 billion
By Samuel Ogunsona and Fred Ojinika
The 17 Southern States in Nigeria generated more that of N387b in Value Adde Tax, (VAT) but got a paltry N149b in August 2024.
This has raised genuine concern about disparity in resource allocation and a complete assault on the principles of Federalism, a major source of friction in Nigeria
The Federal Inland Revenue Service (FIRS) revealed that the southern states contributed a staggering N387.06 billion to the Value Added Tax (VAT) revenue in August 2024 alone but the 19 Northern states took the bulk of the fund.
The 17 Southern states received only N149.09 billion in allocation, sparking concerns over the fairness of the current VAT distribution system.
According to the FIRS data, the nationwide VAT revenue for August stood at N444.19 billion.
The southern states’ contribution of N387.06 billion accounted for nearly 87% of the total VAT revenue.
In contrast, ten northern states contributed a combined N13.69 billion but received a substantial N59.17 billion in allocations.
The disparity in VAT contributions and allocations is evident in the cases of Zamfara State and Lagos State.
While Zamfara State contributed only N432.80 million, it received N5.65 billion in VAT allocation. On the other hand, Lagos State contributed a staggering N249.77 billion but received only N40.22 billion in return.
The proposed tax reform bill, introduced by the Presidential Committee on Fiscal and Tax Reform, aims to address these disparities by adopting the derivation principle for distributing VAT revenues.
Under this principle, VAT revenue would be distributed based on where goods and services are consumed, rather than pooled centrally and redistributed.
According to Zacch Adedeji, Chairman of the FIRS, “VAT is fundamentally a consumption tax.”
He emphasized that the proposed reforms aim to ensure fairer revenue distribution.
However, the reforms have faced opposition from some northern stakeholders, who argue that the bill undermines the interests of the North and other sub-national entities.
