A recent report by SBM Intelligence has highlighted that only five Nigerian states—Anambra, Cross River, Lagos, Ogun, and Rivers—are fiscally self-sufficient and capable of surviving without revenue allocations from the Federation Account. The analysis revealed that from January to October 2024, these states demonstrated the capacity to meet their financial needs independently, unlike others reliant on federal distributions.

The report delved into Value Added Tax (VAT) allocations, illustrating disparities between states’ VAT contributions and the revenues they received. For example, states like Imo reportedly received 1715% of their generated VAT during the period, while others such as Abia, Cross River, and Kebbi received about 700% of their contributions. Conversely, Lagos and Rivers, which contributed significantly to the VAT pool, received minimal allocations. Lagos state was allocated only 16.76% of its VAT contributions, and Rivers received 22%, underscoring significant fiscal inequities.

The report critiqued President Bola Tinubu’s proposed tax reforms, suggesting they fail to address the unique economic contexts of various regions. In the Northeast, states received an average of 244.6% of their VAT contributions, with Bauchi receiving the highest allocation at 384.94%, while Adamawa received 165.69%. SBM Intelligence warned that such disparities could deepen economic inequalities across the country.

The reforms have sparked debates, particularly among Northern governors, who argue that the new tax policies could disrupt the economic balance in their regions. Calls for broader consultations and a review of the proposed bill have grown, as stakeholders emphasize the need for reforms that account for regional differences and ensure equitable resource distribution.