Lagos alone contributes 55% of Nigeria VAT collections but receives less on few number of councils

Kemi Adeosun, minister for finance, says more than half of Nigeria’s value added tax (VAT) comes from Lagos state alone.

Quoting current value added tax (VAT) collection data across Nigeria, the minister said: “55% of Nigeria’s VAT is collected in Lagos State, while 20 percent is derived from Abuja, the Federal Capital Territory.”

Other top contributors to the VAT pool include Rivers (6%), Kano (5%) and Kaduna (1%), meaning that four states of the federation account for 87 percent of VAT receipts with the other 32 accounting for a mere 13 percent.

Adeosun disclosed this while speaking at the parley between the Federal Government and progressive governors’ forum (PGF) in Abuja Tuesday, saying that the states must do more to generate revenue from within and not solely depend on the federal government for federal allocation.

“I’m hoping that one day Finance Commissioners will stop needing to come to Abuja monthly to share FAAC, because IGR (internally generated revenue) will be sufficient,” she said.

The statistics vividly indicates that Lagosians spend to put money in the coffers of other states since allocation is done on number of local government councils with Lagos having just 20 as against many states having over 30.

The disclosure, according to an analyst, bring to fore the current revenue allocation imbalance, “which rewards indolence and not hard work.” He said that receipts from the various revenue streams should be distributed at a ratio of 60 percent to states that they came from in order for each states to compete and seek area of niche to generate revenue.

Speaking on the topic “The Funding Nigeria Needs,” the minister had earlier complained about the country’s abysmal tax-to-GDP ratio, which she said was at six percent, one of the lowest in the world.

She noted that there is no country in the world with high tax compliance rate is poor, and no rich country has a low tax compliance rate.

“There is no poor country that has a high tax compliance rate, and no rich country that has a low one,” Adeosun said.