Out of the N5.718 trillion distributable Worth Added Tax (VAT) income shared by the Federation Accounts Allocation Committee (FAAC) between January and November 2024, three states and the FCT earned N4.183 trillion as their share, leaving the remaining 33 states to share the remaining N1.534 trillion.
Based mostly on the present VAT income sharing system, Lagos State will get 42 per cent, that means that the state alone takes house N2.401 trillion as its share throughout the interval; Rivers State, which takes 16 per cent, received N914.88 billion throughout the identical interval, FCT with 10 per cent received N571.8 billion; whereas Oyo state that takes 5.2 per cent received N297.336 N285.9 billion.
The VAT sharing system has turn into a contentious difficulty in current occasions following the introduction of a brand new tax reform invoice, which proposes radical adjustments to the present sharing system.
In response to the present system, the Federal Authorities receives 15 per cent of VAT, states and the FCT take 50 per cent, whereas native governments take 35 per cent.
Of the 50 per cent meant for the states, every state retains 20 per cent of the VAT collected inside its borders as derivation, 30 per cent is distributed primarily based on the states’ inhabitants, whereas the remaining 50 per cent is shared equally amongst all of the states.
In response to the Presidential Committee on Fiscal Coverage and Tax Reforms, this sharing system doesn’t keep in mind the truth that over 70 per cent of products and companies are consumed exterior the pinnacle workplaces of the corporations rendering these companies or producing these items however solely recognises the place VAT is remitted.
The brand new system, which it proposes, provides Federal Authorities 10 per cent of VAT income, states and FCT, 55 per cent and native governments 35 per cent.
MEANWHILE, the Unbiased Media and Coverage Initiatives (IMPI) has thrown its weight behind the tax reform payments at the moment awaiting approval by the Nationwide Meeting, hailing it as a daring transfer to revamp Nigeria’s financial system.
Talking throughout the organisation’s press convention in Abuja, yesterday, Chairman of IMPI, Omoniyi Akinsiju, emphasised the importance of the proposed laws, stating that it was essential for producing income, fostering enterprise progress, and enhancing residents’ buying energy.
He expressed dismay over what he referred to as ‘unwarranted controversy’ in regards to the reforms, notably the VAT-sharing system, calling it a distraction from the transformative advantages of the payments.
