Lagos State, Nigeria’s biggest state economy, and Abuja, the Federal Capital Territory, are the two sub-national governments most short-changed in the sharing of revenue by the Federation Account Allocation Committee (FAAC), the analysis of 10-month FAAC revenue sharing figures show.
Both Lagos State and FCT Abuja received N99.43 billion and N50 billion respectively from FAAC and that represented just 26 percent and 36 percent of the value added tax (VAT) generated in Lagos and Abuja between January and September 2017.
The figures provided by the Federal Ministry of Finance indicate the largest sources of VAT in Nigeria are Lagos State, FCT Abuja, Rivers, Kano and Kaduna.
Specifically, Lagos State generates 55 percent of the nation’s VAT; FCT Abuja, 20 percent; Rivers, 6 percent; Kano, 5 percent and Kaduna, 1 percent, meaning that four states and FCT generate 87 percent of Nigeria’s value added tax.
Apart from that, ports in Lagos accounted for 97 percent of export activities and 80 percent of import activities within the first six months of this year.
Over 96 percent of export activities and 59 percent of import activities were processed between January and June this year within the Apapa ports complex alone just as Tin Can Island, Lylypond and Muritala Muhammed International Airport had about 1 percent of export activities and 21 percent of import transactions processed through them.
Meanwhile, the VAT figures from the National Bureau of Statistics (NBS) shows that Nigeria generated N389.61 billion as non-import VAT; N163.65 billion as non-import foreign VAT and N148.43 billion as NCS-import VAT. This brings the total VAT generated between January and September 2017 to N701.68 billion.
Fifty-five percent of this comes to N389.92 billion for Lagos State while twenty percent comes to N140.34 billion for Abuja. Juxtaposed against the VAT figures with the FAAC revenues to Lagos and Abuja, the two sub-national governments got just 26 percent and 36 percent of VAT generated.
Abdulwasiu Musah, deputy speaker, Oyo State House of Assembly believes that every state in Nigeria should be allowed to control at least 30 percent of the resources domiciled in it.
“I do not for instance subscribe to a 100 percent resource control. As a student of environmental law I believe mineral resources should be made a national bequest while the community where they are exploited also benefit from them. So, I believe clearly without equivocation, that in addressing questions of resource control, attention needs be paid to VAT as a veritable source. Premium has to be given to this when also considering derivative quantum. I am an advocate of 30 percent as derivation,” Musah said.
By regions, the south east geopolitical zone received the least share of FAAC revenue distributions between January and October this year. The five states got N176.07 billion, representing 10 percent of the N1.702 trillion shared in 10 months this year. It is followed by the north East geopolitical zone, with N212.05 billion, which received 12 percent of the revenue shared in ten months this year.
The north central received 13 percent of the FAAC revenue, which amounted to N213.74 billion. The south west got 16.8 percent, or N286.44 billion from the revenue shared during the reference period.
The North West with N291.85 billion got 17.1 percent of the resources shared among the sub national governments while the south-south geopolitical zone received N522.49 billion which amounted to 31 percent of the total revenue shared between January and October 2017. Collectively the 19 northern states got N717.65 billion representing 42 percent while the 17 southern states received N985 billion representing 58 percent of the total revenue shared during the reference period.
“I believe that the present arrangement is robbing Peter to pay Paul. States should share from the federation account according to their contributions. In the absence of that, fiscal federalism is inevitable. We are in a situation whereby unhealthy states reap where they did not sow. States that cannot survive be better acquired or merge with strong ones. Fiscal federalism may be the ultimate solution,” said Remi Alatise, a lecturer at the department of sociology, Fountain University, Osogbo.
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