Five northern states, two south-western states, two south-south states, and one south-eastern state collected a total of N373.84bn of the N836.51bn Value Added Tax allocation available for states in 14 months.
This is according to the latest FAAC allocation data available from the National Bureau of Statistics for the months of January 2020 through to February 2021.
In the period under review, the thirty-six states of the federation and the Federal Government shared N1.09tn as VAT revenue from the Federation Accounts Allocation Committee.
The top 10 states were: Lagos (N153.94bn), Kano (N32.48bn), Oyo (N29.85bn), Rivers (N28.43bn), Kaduna (N24.75bn), Katsina (N22.72bn), Delta (N20.91bn), Bauchi (N20.49bn), Anambra (N20.14bn), and Jigawa (N20.13bn).
Lagos got the largest share of VAT revenue in the period under review (N153.94bn), while Nasarawa got the least allocation of N15.36bn.
Based on the regions, the South-West region received the highest VAT allocation (N256.21bn), followed by the North-West (N154.41bn), South-South (N119.88bn), North-East (107.43bn), North-Central (N106.58bn). The South-East received the least from the VAT allocations (N91.99bn).
The bottom 10 states were Nasarawa (N15.36bn), Bayelsa (N15.79bn), Taraba (N16.23bn), Gombe (N16.33bn), Kwara (N16.35bn), Ekiti (N16.46bn), Yobe (N16.90bn), Abia (N17.03bn), Ebonyi (N17.04bn), and Cross River (N17.17bn).
According to Investopedia, VAT is a consumption tax that is levied on a product repeatedly at every point of sale at which value has been added. In Nigeria, VAT is collected by the Federal Inland Revenue Service and shared by the Federal Government.
According to data from the NBS, VAT has a non-import VAT local, non-import VAT for foreign, and Nigerian Customs Service Import VAT components.
In 2020, N1.53tn was generated as VAT in the nation. Non-import VAT local accounted for N763bn, non-import VAT for foreign accounted for N420.43bn, and NCS-Import VAT accounted for N347.72.
Locally derived tax accounts for about 50 per cent of total VAT, while imported goods and foreign goods or services not imported account for the other half. Local VAT is imposed on goods and services consumed within each state of the federation.
Based on the country’s revenue sharing formula, the Federal Government gets 15 per cent of VAT, while states share 50 per cent, and local governments share 35 per cent based on the sharing formula. In the period under review, the Federal Government got N251.55bn from VAT.
In an August 10 ruling, the Federal High Court sitting in Port Harcourt, Rivers State, declared that it was the Rivers State Government, and not the Federal Inland Revenue Services, that should collect VAT and Personal Income Tax in the state.
In 2020, the total internally generated revenue of the 36 states in Nigeria was N1.21tn.
A former Minister of Finance, Mrs Kemi Adeosun, had said 55 per cent of total local VAT was generated in Lagos.
Based on this indication, in 2020, Lagos may have contributed N419.65bn. in the same year, however, it received N130.97bn.
The Governor of Rivers State, Nyesom Wike, said recently that Rivers State generated N15bn VAT revenue in June this year, but got only N4.7bn. He added that Kano generated N2.8bn in the same month and got the same N2.8bn back.
Wike also said that Lagos generated N46.4bn but received N9.3bn.
The Director-General, Lagos Chamber of Commerce and Industry, Dr Chinyere Almona, on Sunday said the current sharing formula for the states and LGAs should be adjusted using the factors of equality 20 per cent, population 30 per cent, and derivation 50 per cent.
This is against the present system of equality 50 per cent, population 30 per cent, and derivation 20 per cent.
According to her, this arrangement should be agreeable to the concerned parties and can drive innovation on revenue generation in all the states towards increasing their internally generated revenue.
She added that it would also make the states more sensitive to the needs of businesses in their respective jurisdictions.
Punch
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