ICYMI: 10 Northern states contribute N13.69bn to VAT pool — allocated N59.17bn in August 2024

Nigeria’s proposed tax reform bill, introduced by the Presidential Committee on Fiscal and Tax Reform chaired by Taiwo Oyedele, has stirred widespread debate.

The reform bill, which aims to streamline the tax system, includes harmonising multiple levies, unifying revenue collection processes, and integrating technology for greater efficiency.

At the centre of the proposal is a plan to adopt the derivation principle for the distribution of Value Added Tax (VAT) revenues.

Under this principle, VAT revenue would be distributed based on where goods and services are consumed rather than pooled centrally and redistributed.

ALSO READ: Southern states contribute N387.06bn to VAT pool — allocated N149.09bn in August 2024

Federal Inland Revenue Service (FIRS) Chairman, Zacch Adedeji, explained the rationale by clarifying that VAT is fundamentally a consumption tax.

He stated, “On derivation, I see there is a mix-up here. We have the oil and gas. If you look at the oil and gas, where they produce is where we sell and collect money from the oil. That’s why it is limited to their States.

“VAT by definition is a consumption tax. If you use derivation in VAT, what it means is that where is it consumed. Where do you make the call? Where is the bank transaction done? What the bill seeks to correct is that the existing structure we have does not represent the intent of Nigeria.”

ALSO READ: FULL LIST: VAT generated in Lagos more than 35 other states, FCT combined in August 2024

While the reform aims to ensure fairer revenue distribution, it has met strong opposition from northern states.

Some Northern stakeholders argue that the contents of the proposed bill are against the interests of the North and other sub-nationals.

They claim that switching to a derivation model would unfairly favour economically dominant states, particularly Lagos, where most companies’ headquarters are located. 

Tribune Online reports that recent data from FIRS highlights the disparity in VAT contributions and allocations.

In August 2024, Lagos State alone generated more VAT (N249.77 billion) than the combined total of 35 other states and the Federal Capital Territory (FCT) but only received N40.22 billion in allocation.

Meanwhile, ten northern states, which contributed a combined N13.69 billion, received a staggering N59.17 billion in allocations.

For instance, Zamfara State contributed N432.80 million but received N5.65 billion, while Katsina generated N1.68 billion and received N7.27 billion.

Below is the full list of what some northern states contributed to the VAT pool and what they benefitted (August 2024):

1. Zamfara

Contributed: N432.80m

Allocated: N5.65bn

2. Kebbi

Contributed: N665.17m

Allocated: N5.66bn

3. Bauchi

Contributed: N691.28m

Allocated: N6.48bn

4. Nasarawa

Contributed: N1.47bn

Allocated: N4.97bn

5. Jigawa

Contributed: N1.59bn

Allocated: N6.42bn

6. Katsina

Contributed: N1.68bn

Allocated: N7.27bn

7. Yobe

Contributed: N1.71bn

Allocated: N5.26bn

8. Niger

Contributed: N1.73bn

Allocated: N6.12bn

9. Sokoto

Contributed: N1.84bn

Allocated: N6.07bn

10. Taraba

Contributed: N1.88bn

Allocated: N5.27bn

Total contribution: 13.69 billion 

Total allocation received: 59.17 billion 

FULL LIST: 36 and FCT contributions and allocation from VAT pool in August 2024

Here is a full list of VAT generated and received from VAT pool by the 36 states and FCT in August 2024:

1. Lagos

Contributed: N249.77bn

Allocation: N40.22bn

2. Rivers: 

Contributed: N70.54bn

Allocation: N15.54bn

3. Oyo: 

Contributed: N20.11bn

Allocation: N9.46bn

4. FCT: 

Contributed: N18.17bn

Allocation: N5.34bn

5. Delta: 

Contributed: N13.09bn

Allocation: N7.82bn

6. Bayelsa: 

Contributed: N7.12bn

Allocation: N5.58bn

7. Kano: 

Contributed: N4.65bn

Allocation: 9.71bn

8. Akwa Ibom: 

Contributed: N4.49bn

Allocation: N6.54bn

9. Anambra: 

Contributed: N4.28bn

Allocation: N6.66bn

10. Edo: 

Contributed: N4.05bn

Allocation: N6.08bn

11. Ekiti: 

Contributed: N3.66bn

Allocation: N5.54bn

12. Borno: 

Contributed: N3bn

Allocation: N6.48bn

13. Kwara: 

Contributed: N2.89bn

Allocation: N5.44bn

14. Adamawa: 

Contributed: N2.59bn

Allocation: N5.86b

15. Plateau: 

Contributed: N2.58bn

Allocation: N5.87bn

16. Benue: 

Contributed: N2.56bn

Allocation: N6.47bn

17. Gombe: 

Contributed: N2.55bn

Allocation: N5.38bn

18. Kogi: 

Contributed: N2.43bn

Allocation: N5.91bn

19. Kaduna: 

Contributed: N2.03bn

Allocation: N7.48bn

20. Ebonyi: 

Contributed: N1.90bn

Allocation: N5.20bn

21. Taraba: 

Contributed: N1.88bn

Allocation: N5.27bn

22. Sokoto: 

Contributed: N1.84bn

Allocation: N6.07bn

23. Osun: 

Contributed: N1.81bn

Allocation: N5.91bn

24. Ogun: 

Contributed: N1.74bn

Allocation: N6.08bn

25. Niger: 

Contributed: N1.73bn

Allocation: N6.21bn

26. Yobe: 

Contributed: N1.71bn

Allocation: N5.26bn

27. Katsina: 

Contributed: N1.68bn

Allocation: N7.27bn

28. Jigawa: 

Contributed: N1.59bn

Allocation: N6.42bn

29. Nasarawa: 

Contributed: N1.47bn

Allocation: N4.97bn

30. Ondo: 

Contributed: N1.45bn

Allocation: N5.88bn

31. Enugu: 

Contributed: N1.08bn

Allocation: N5.73bn

32. Cross River: 

Contributed: N1.08bn

Allocation: N5.51bn

33. Bauchi: 

Contributed: N691.28m

Allocation: N6.48bn

34. Kebbi: 

Contributed: N665.17m

Allocation: N5.66bn

35. Abia: 

Contributed: N663.42m

Allocation: N5.43bn

36. Zamfara: 

Contributed: N432.80m

Allocation: N5.65bn

37. Imo

Contributed: N235.41m

Allocation: N6.01bn

Total VAT Generated: N444.19bn

Total Allocation Distributed: N272.29bn

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