The latest Internally Generated Revenue (IGR) report released by the National Bureau of Statistics showed that ten (10) states in Nigeria received a total sum of N430.07 billion from tax revenue in half of 2019.
According to the Bureau’s report, the top 10 states in Nigeria generated 72% of the total tax revenue. Basically, the states include Lagos, Rivers FCT, Delta, Akwa Ibom, Kaduna, Ondo, Ogun, Cross River and Kano.
The Breakdown: Basically, in half-year 2019, all the 36 states in Nigeria (plus FCT) generated a total sum of N596 billion tax revenue, down from the N579.5 billion recorded in half-year 2018. This means tax revenue for states rose by 29% between half-year 2018 and 2019. Basically, taxes collected by the states include Pay As You Earn (PAYE), Direct Assessment, Road Taxes and other taxes.
Specifically, PAYE accounted for 72.4% or N432.2 billion of the total tax revenue generated across states. Also, the sum of N121 billion (24%) was generated from other taxes, N25.4 billion was generated from direct assessment and road tax (N14.5 billion or 2.4%).
In half-year 2019 (January – June 2019), Nigeria’s commercial city, Lagos, tops with a total N187.8 billion tax revenue. Rivers follows with tax revenue generated amounting to N72.4 billion, while FCT ranks third with tax revenue of N38.5 billion.
Meanwhile, 10 states with the lowest tax revenue generated within the period include Nasarawa (N4.4 billion), Ebonyi (N4.3 billion), Jigawa (N4.2 billion), Kebbi (N4.1 billion), Adamawa (N4.1 billion) and Anambra (N3.4 billion). Others are Borno (N2.8 billion), Taraba (N1.9 billion), Gombe (N1.7 billion) and Yobe (N1.4 billion).
Essentially, PAYE is a form of personal income tax that refers to tax deducted directly from the wages and salaries of employees operating in the formal sector.
All employers in Nigeria are responsible for deducting PAYE taxes from their employees’ earnings. While road taxes are daily levies paid by commercial transporters operating within the states, direct assessment may relate to a form of personal income tax used to assess tax for self-employed individuals.
Meanwhile, other taxes include various taxes Such as levies on market traders, land registration and other land-related fees, development levies on individuals, pool betting/lottery/gaming fees, stamp duties on individuals, etc.
What this means: As low revenue generation concerns grow across states in Nigeria, the top 10 states may be regarded as the country’s major commercial cities.
- For instance, in an earlier report published on Nairametrics, it was reported that Lagos State generated the biggest Internally Generated Revenue of N205.16 billion in half-year and this constituted 30% of the IGR generated across states. Also, Rivers and FCT rank top behind Lagos.
- It should be noted that following the recent financial downturn recently witnessed in the economy, most states have been directed by the Federal Government to improve their tax net in order to ease off the dwindling oil revenue.
- Despite the rise in tax revenue, 14 states earned only between N1 billion and N4 billion as tax revenue and this is worrisome.