The Federal Inland Revenue Service (FIRS) Chairman, Dr. Zacch Adedeji, has slammed the current distribution of value-added tax (VAT) proceeds in Nigeria, describing it as grossly unfair.
Dr. Adedeji revealed that Lagos, Rivers, and the Federal Capital Territory (FCT) collectively take over 70% of VAT revenues, leaving the remaining 34 states with significantly less.
He made these remarks during an interactive session with the House of Representatives on Monday, where he discussed proposed tax reform bills.
Adedeji disclosed that Lagos alone received 42% of VAT proceeds for October, a figure he personally signed off last Friday.
“Today, I just signed the data on VAT for October. Lagos will take 42%, Rivers will take 16%, and the FCT will take 10%. Altogether, these three regions take over 70%,” he stated.
This distribution, according to him, does not represent the interests of the nation or its people.
“This Is Not What Nigeria Stands For”
The FIRS chairman expressed dissatisfaction with the current system, which ties VAT allocation to the locations of companies’ head offices rather than the actual consumption of goods and services.
He highlighted the case of MTN, Nigeria’s leading telecommunications provider.
“MTN contributes the highest VAT to Lagos because its head office is there, but its services are consumed across the country,” Adedeji said.
He argued that states like Borno and Bauchi, which collect only 0.32% and 0.4% of VAT proceeds respectively, are unfairly disadvantaged.
“Any day I sign off on this, I don’t feel like I am a Nigerian because this is not what we represent in our prayer as a nation,” he lamented.
Lawmakers Debate Impact on States
The proposed reforms aim to redistribute VAT revenues more equitably by prioritizing consumption over the location of corporate offices.
Adedeji believes the reforms will benefit the majority of states, especially those in the North.
“Seventy percent of consumption is not accruing to Lagos, Rivers, or the FCT. Whatever way you look at it, apart from these three states, every northern state will benefit,” he explained.
His comments drew mixed reactions from lawmakers, including Babajimi Benson (APC, Lagos) and Adamu Yusuf Gagdi (APC, Plateau).
Benson expressed concerns about the impact on Lagos, a major revenue-generating state, while Gagdi questioned how displaced populations in the North could benefit from VAT proceeds tied to consumption.
“A Bill for Fairness and Unity”
Adedeji assured lawmakers that the reforms are designed to ensure fairness and promote unity.
“The current structure benefits a few regions, but with this Bill, every state, irrespective of its economic situation, will gain,” he emphasized.
He praised President Bola Tinubu’s administration for proposing these changes, calling them a bold step towards correcting historical inequalities.
“This is the wisdom of Mr. President at work. We need to change this structure for the good of all Nigerians,” he added.
A Call for National Balance
The FIRS boss insisted that reforming VAT distribution is critical for Nigeria’s economic fairness and national unity.
He highlighted the glaring disparities in current allocations, noting that smaller states are losing out despite their significant consumption levels.
His remarks were met with applause from lawmakers, though some voiced reservations about the potential impact on their regions.
Dr. Adedeji ended his address with a passionate plea for support.
“This reform is not about politics or regions. It is about doing what is right for Nigeria and ensuring that no state is left behind,” he declared.
