55% of VAT revenue generated from Lagos –Adeosun

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

Adeosun, according to an online publication, TheCable, said this during a meeting with members of the Progressive Governors’ Forum in Birnin Kebbi.

She explained that the balance of 45 per cent was being generated from the remaining 35 states of the federation and the Federal Capital Territory.

Giving a breakdown of the receipts from VAT, the minister said while Lagos accounted for 55 per cent, 20 per cent was coming from the FCT.

She added that Rivers, Kano and Kaduna states accounted for six per cent, five per cent and one per cent, respectively.

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.

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.

Cumulatively, Adeosun noted that the four states and the FCT accounted for 87 per cent of the entire VAT collections.

She described the tax compliance rate in the country as very low, adding that this was why the Federal Government was taking proactive steps to improve the rate of voluntary compliance.

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.

According to 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.

Out of the total VAT generated in the first quarter of this year, N126.64bn was received as non-import VAT locally, while N31.72bn was generated as non-import foreign VAT.

The balance of N46.41bn was generated as Nigeria Customs Service import VAT.