in , , , , , , , , , , , , , , , , , ,

Only five states can survive in Nigeria without federal allocation-Report

A recent report by SBM Intelligence, a leading think tank, has revealed that only five Nigerian states possess the fiscal strength to function independently of allocations from the Federation Accounts Allocation Committee (FAAC).

These states—Anambra, Cross River, Lagos, Ogun, and Rivers—are the only ones capable of meeting their financial needs without relying on federal distributions.

The analysis, which covered the period from January to October 2024, underscores the significant financial disparities among Nigerian states. It highlighted that while these five states exhibited fiscal independence, many others are heavily reliant on federal allocations, especially from Value Added Tax (VAT) revenues.

The report noted that some states earned more revenue through VAT allocations than they contributed. For example, Imo State received a staggering 1715% of its VAT contributions during the study period. Similarly, Abia, Cross River, and Kebbi States each received over 700% of what they contributed to the VAT pool.

In stark contrast, Lagos and Rivers, two of the country’s top contributors to VAT, received the smallest portions relative to their contributions. Lagos received just 16.76% of its VAT input, while Rivers managed 22%.

The report also raised concerns about President Tinubu’s proposed tax reforms, suggesting that the uniform approach fails to consider the economic peculiarities of different regions. The northeast region, for instance, benefited significantly from VAT allocations, receiving an average of 244.6% of its contributions. Within this region, Bauchi State received 384.94% of its VAT contributions, while Adamawa received 165.69%.

SBM Intelligence warned that such disparities, if left unaddressed, could worsen existing economic imbalances across the country. These concerns have fueled debates around the proposed tax reforms, with northern state governors expressing fears that the changes could disrupt the region’s economic stability.

Amid these disagreements, there have been growing calls for broader consultations to ensure the proposed tax policies reflect the diverse economic realities of Nigeria’s states. Many stakeholders argue that without such inclusivity, the reforms could deepen fiscal inequities rather than foster economic development.

Report

Leave a Reply

Your email address will not be published. Required fields are marked *

What do you think?

928 Points
Upvote Downvote
Enthusiast

Written by Olusesan Oba

Years Of MembershipStory MakerContent Author

LAWMA Holds 2024 Christmas Carol, Thanksgiving

Gunmen shoot Judge dead