By Adam Mosadioluwa

The Federal Inland Revenue Service (FIRS) has revealed that Value Added Tax (VAT) revenue generated in the southern states of Nigeria significantly exceeded the allocation received by these states from the VAT pool in August 2024.

According to recent data released by the FIRS, the nationwide VAT revenue for August stood at N444.19 billion, with southern states contributing an impressive N387.06 billion.

However, despite this significant contribution, the southern states received just N149.09 billion in VAT allocation.

This contrasts sharply with the situation in ten northern states, which contributed a combined N13.69 billion but received a substantial N59.17 billion in allocations.

For instance, Zamfara State, a northern state, contributed only N432.80 million but received N5.65 billion, while

Lagos State, which contributed a staggering N249.77 billion, received just N40.22 billion in return.

Tribune Online reports that Nigeria’s proposed tax reform bill, introduced by the Presidential Committee on Fiscal and Tax Reform chaired by Taiwo Oyedele, sparked widespread debate recently.

The reform bill seeks to streamline the tax system by harmonising multiple levies, unifying revenue collection processes, and integrating technology to enhance efficiency. A key proposal is the adoption of 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.

The Chairman of the Federal Inland Revenue Service (FIRS), Zacch Adedeji, clarified the rationale for this shift, emphasising that VAT is fundamentally a consumption tax.

While the proposed reforms aim to ensure fairer revenue distribution, they have faced strong opposition from some northern stakeholders, who argue that the bill undermines the interests of the North and other sub-national entities.

The recent data from the FIRS highlights the disparity in VAT contributions and allocations, with southern states receiving significantly less in allocation compared to their contributions, while some northern states received allocations exceeding their contributions.

Below is a breakdown of VAT contributions and allocations for the southern states in August 2024:

1. South-west

Contributed: N278.52bn

Allocated: N73.09bn

2. South-south

Contributed: N100.38bn

Allocated: N46.97bn

3. South-east

Contributed: N8.16bn

Allocated: N29.03bn

Total Contribution: N387.06 billion

Total Allocation Received: N149.09 billion

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

Lagos

Contributed: N249.77bn

Allocation: N40.22bn

Rivers:

Contributed: N70.54bn

Allocation: N15.54bn

Oyo:

Contributed: N20.11bn

Allocation: N9.46bn

FCT:

Contributed: N18.17bn

Allocation: N5.34bn

Delta:

Contributed: N13.09bn

Allocation: N7.82bn

Bayelsa:

Contributed: N7.12bn

Allocation: N5.58bn

Kano:

Contributed: N4.65bn

Allocation: 9.71bn

Akwa Ibom:

Contributed: N4.49bn

Allocation: N6.54bn

Anambra:

Contributed: N4.28bn

Allocation: N6.66bn

Edo:

Contributed: N4.05bn

Allocation: N6.08bn

Ekiti:

Contributed: N3.66bn

Allocation: N5.54bn

Borno:

Contributed: N3bn

Allocation: N6.48bn

Kwara:

Contributed: N2.89bn

Allocation: N5.44bn

Adamawa:

Contributed: N2.59bn

Allocation: N5.86b

Plateau:

Contributed: N2.58bn

Allocation: N5.87bn

Benue:

Contributed: N2.56bn

Allocation: N6.47bn

Gombe:

Contributed: N2.55bn

Allocation: N5.38bn

Kogi:

Contributed: N2.43bn

Allocation: N5.91bn

Kaduna:

Contributed: N2.03bn

Allocation: N7.48bn

Ebonyi:

Contributed: N1.90bn

Allocation: N5.20bn

Taraba:

Contributed: N1.88bn

Allocation: N5.27bn

Sokoto:

Contributed: N1.84bn

Allocation: N6.07bn

Osun:

Contributed: N1.81bn

Allocation: N5.91bn

Ogun:

Contributed: N1.74bn

Allocation: N6.08bn

Niger:

Contributed: N1.73bn

Allocation: N6.21bn

Yobe:

Contributed: N1.71bn

Allocation: N5.26bn

Katsina:

Contributed: N1.68bn

Allocation: N7.27bn

Jigawa:

Contributed: N1.59bn

Allocation: N6.42bn

Nasarawa:

Contributed: N1.47bn

Allocation: N4.97bn

Ondo:

Contributed: N1.45bn

Allocation: N5.88bn

Enugu:

Contributed: N1.08bn

Allocation: N5.73bn

Cross River:

Contributed: N1.08bn

Allocation: N5.51bn

Bauchi:

Contributed: N691.28m

Allocation: N6.48bn

Kebbi:

Contributed: N665.17m

Allocation: N5.66bn

Abia:

Contributed: N663.42m

Allocation: N5.43bn

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