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Udoma, Buhari, Adeosun
L-r: Minister of national Planning, Senator Udo Udoma, President Muhammadu Buhari and Minister of Finance, Mrs. Kemi Adeosun

Fresh reason emerges for special financial status for Lagos, but…

…As it rakes in 55% VAT for FG

Apart from hosting 992 out of 994 that paid well over N10mn company tax throughout last year, Lagos has again scored first by generating 55 per cent in Value Added Tax (VAT) for the federal government at a time the finances of the government is in jeopardy.

This was made public by the Minister of Finance, Mrs. Kemi Adeosun, on Tuesday, saying 55 per cent of the revenue generated by the Federal Government from Value Added Tax receipts was being collected from Lagos State.

Before now, the government and people of the state had been making several failed efforts to drive home facts that show that Lagos deserves a better deal from the federal government in terms of special status as the commercial hub of the economy where the apex government makes its key income, but strong forces had been drawing back the idea, thus creating more frustration. But recent discoveries including the VAT impact and high number of mega firms paying high corporate tax may raise the force of logic for the deal to be consummated as soon as possible.

Details sources from an online publication, TheCable, quoted the minister as saying this during a meeting with members of the Progressive Governors’ Forum in Birnin Kebbi.

According to her, the balance of 45 per cent was being generated from the remaining 35 states of the federation and the Federal Capital Territory.

In the breakdown, Adeosun noted that “while Lagos accounted for 55 per cent, 20 per cent was coming from the FCT”.

She said, “There is no poor country that has a high tax compliance rate, and no rich country that has a low one. Fifty-five per cent of Nigeria’s VAT is collected in Lagos State; 20 per cent in the FCT; six per cent in Rivers; five per cent in Kano; and one per cent in Kaduna.

“I’m hoping that one day, the finance commissioners (of the states) will stop needing to come to Abuja monthly to share FAAC (Federation Account Allocation Committee’s monthly sharing of federally collected revenue) because IGR will be sufficient.”

Based on allocation from FAAC, the Federal Government gets 15 per cent of VAT revenue, while the states and local governments get 50 per cent and 35 per cent, respectively.

Already, the National Bureau of Statistics, the sum of N204.77bn was generated as VAT in the first quarter of 2017 as against N207.35bn generated in the fourth quarter of 2016.

Continuing, she revealed further that Rivers, Kano and Kaduna states accounted for six per cent, five per cent and one per cent, respectively.

Business Hilights reveals that in February this year, based on analysis of FAAC allocations, Lagos State received the sum of N6.14bn from VAT revenue, while Kano, Kaduna and Rivers got N1.66bn, N4.23bn and N1.33bn, respectively.

Again, for the month of April, Lagos State received the sum of N7.04bn from VAT revenue, while Kano, Kaduna and Rivers got N1.84bn, N1.19bn and N1.78bn, respectively.

In general, only about four states and the FCT accounted for 87 per cent of the entire VAT collections.

About Business Hilights

Business Hilights is an online news channel conceptualized and structured to report and track on a daily basis; latest developments in critical business sectors to serve as a one stop news gateway for governments, foreign and indigenous investors.

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