By Adenike Lawal
From January to November 2024, the Federation Accounts Allocation Committee (FAAC), reported a total distributable Value Added Tax (VAT), revenue of N5.718 trillion.
Of this, Lagos State, Rivers State, the Federal Capital Territory (FCT), and Oyo State received N4.183 trillion, while the remaining 33 states shared N1.534 trillion.
Lagos, benefiting most from the VAT system, received 42% of the total collection, amounting to approximately N2.4 trillion.
Rivers State followed with 16% (N914.88 billion), the FCT received 10% (N571.8 billion), and Oyo State’s share was 5.2% (N297.3 billion).
The current VAT distribution formula has sparked debate, especially in light of a proposed tax reform bill.
The present system allocates 15% of VAT to the Federal Government, 50% to states and the FCT, and 35% to local governments.
However, the proposed changes would reduce the Federal Government’s share to 10% while increasing states’ allocation to 55%.
The Independent Media and Policy Initiatives (IMPI), has endorsed the reform bills, arguing they will boost revenue, support business growth, and improve citizens’ purchasing power.
IMPI Chairman Omoniyi Akinsiju dismissed controversies surrounding the VAT-sharing formula, calling them distractions from the potential economic benefits of the reforms.
