- There is a paradox in Nigeria’s VAT allocation: economically vibrant states often receive much less in VAT allocations than they generate, while less active states receive much more than they contribute.
- For example, Lagos generated ₦2.75 trillion in VAT but received only 16.74% of that amount, while states like Abia, Enugu, and Imo received allocations several times higher than their contributions.
- This disparity is due to the VAT administration system, which allocates revenue based on where companies are registered, not where economic activity actually occurs.
- The current framework raises questions about fairness and whether fiscal policy accurately reflects and rewards true economic productivity across states.
Source: dailynewsngr.com.ng
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
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