Lagos and Ogun states are the only two states in Nigeria that made more Internally Generated Revenue (IGR) than the allocations received from the Federal Government in four years (2017-2020).
This was disclosed in a report by SBM Intelligence, a socioeconomic research firm, titled ” Taxing Nigeria’s subnational economies to oblivion”
The reports also warned that the current fiscal condition of most states is not healthy.
The report revealed that “By 2018, Osun State had fallen off the list, as 2019 ” saw a huge positive change as Lagos, Rivers, Ogun and Delta all generated more internal revenue than they were fed by Abuja.
“By 2020, we were back to just Lagos and Ogun generating more internal revenue received from Abuja. This state of affairs indicates that almost all of Nigeria’s federating units are not fiscally healthy”
According to SBM, falling oil revenues have put states in precarious positions, preventing them from fulfilling basic obligations such as paying salaries, wages, and pensions, as well as providing social services and infrastructure.
“This has increased the urgency of states to increase their internally generated revenue in order to reduce their exposure to volatile and unreliable federal allocations. Due to a limited number of taxable businesses in the states, many state governments end up focusing their efforts on the same businesses that are already paying their fair share of taxes.
“In the end, this has the unintended effect of creating a harsh business environment for all and in some cases, forcing businesses to close due to over-taxation and/ or harassment,” it added.
The report also warned that Nigeria’s telecoms industry is disproportionately overtaxed by the states, citing Kogi State and added that telecom companies are made to pay up to 41 taxes by the state.
Some of the levies include annual right of way renewal; social services contribution; employee economic development levy; mast site premises renewal; fire service yearly renewal; payment of environmental levy; failure to submit an environmental impact assessment report; failure to register industry; failure to submit environmental audit report every two years; storage of petroleum products and radioactive materials without written permission from the Kogi State Environmental Protection Board and others.
The 2021 data released by the National Bureau of Statistics, the 36 states of the federation including the FCT recorded a sum of N849.12 billion as IGR between January and June 2021, which is 38.5% higher than the N612.87 billion recorded in H1 2020 and 26% higher than N673.82 billion recorded in H2 2020.
Lagos State recorded the highest IGR in the review period with N267.23 billion accounting for 31% of the total IGR recorded in the period under review.
In March 2021, the Federation Accounts Allocation Committee (FAAC), shared the sum of N725.571 billion to the three tiers of government, as federation allocation for the month.
States received N227.201 billion, the local government councils got N167.910 billion, while the oil-producing states received N53.356 billion as derivation (13 per cent of Mineral Revenue).
Alleluia is the Assistant Editor and Content Writer at LagosPost.ng. She is a prolific writer and editor, she has written features and news stories on Lifestyle, Sports, Business, Politics and B2B marketing. She is also an event coordinator, host and social media content creator.
