By Jeph Ajobaju, Chief Copy Editor
A total N1.84 trillion Value Added Tax (VAT) revenue was shared by the 36 states and the Federal Capital Territory (FCT) between 2018 and 2020, according to Federation Account Allocation (FAAC) data.
The figures, released by the National Bureau of Statistics (NBS) show that Lagos, Kano, and Oyo received the lion share, a combined 25.6 per cent of the amount shared.
The Federal Inland Revenue Service (FIRS) collected N3.82 trillion VAT between 2018 and 2020 on behalf of the federal government, per NBS data reported by Nairametrics.
VAT revenue has increased since Abuja hiked the rate from 5 per cent to 7.5 per cent in January 2020, more than double from N659.15 billion in 2011 to N1.53 trillion in 2020.
It notched up N1.01 trillion in H1 2021 on the climb to a likely new historic height at year end.
Lagos generates 55% VAT, gets 8.9% back
Commercial hub Lagos received N342.2 billion between January 2018 and December 2020 or 18.6 per cent of the N1.84 trillion shared by the 36 states and the FCT.
Lagos generated more than 55 per cent VAT yet received 18.6 per cent of the N1.84 trillion shared or 8.9 per cent of total N3.82 trillion generated.
VAT distribution to councils is not included this analysis.
According to Nairametrics, Lagos generates such a huge VAT because it has most of the taxable businesses and multinationals.
VAT generation by states in the top eight
- Lagos – N2.1 billion (55 per cent)
- Kano – N68.95 billion (3.7 per cent)
- Oyo – N61.32 billion (3.3 per cent)
- Rivers – N59.22 billion
- Kaduna – N52.96 billion
- Katsina – N48.73 billion
- Delta – N45.95 billion
- Bauchi – N44.03 billion
Rivers Governor Nyesom Wike disclosed last month that Rivers generated about N15 billion VAT in June but received only N4.7 billion share.
VAT generation percentage
- Lagos – 55 per cent
- Abuja – 20 per cent
- Rivers – 6 per cent
- Kano – 5 per cent
- Kaduna – 1 per cent
- Five states and Abuja – 87 per cent
- 32 states – 13 per cent
VAT allocation
- Lagos – more than N46 billion (2018-2020), received just over N9 billion
- Kano – N2.8 billion, got the same N2.8 billion allocation, the second highest
- Federal government – 15 per cent
- States – 50 per cent
- Councils – 35 per cent
- Each state – keeps 20 per cent of VAT collected
- Allocation based on population – 30 per cent
- Allocation shared equally – 50 per cent
VAT sources
- Local non-import – 50 per cent
- Foreign non-import – 27 per cent
- Customs Service import – 23 per cent (federal government)
VAT can’t sustain 34 states
NBS data shows that only Abuja and two states, Lagos and Ogun, can survive on internally generated revenue (IGR) without FAAC allocation.
In Lagos, IGR accounted for 78.3 per cent of revenue between 2018 and 2020, Abuja (57.85 per cent), Ogun (57.39 per cent).
Some states, such as Jigawa, Bayelsa, Yobe, Adamawa, rely almost entirely on federal allocation for their sustenance.