Only Lagos, Ogun Generate More IGR Than FAAC Allocation

Lagos and Ogun are the only two states out of 36 that made more Internally Generated Revenue (IGR) than the allocations received from the Federal Government in four years (2017-2020).

This was disclosed in a report by a socioeconomic research firm, SBM intelligence, titled ” Taxing Nigeria’s subnational economies to oblivion”

The firm also warned that the current condition of the states’ IGR is not healthy.

What SBM is saying about states’ dependency

The report revealed that “By 2018, Osun State had fallen off the list, as 2019 ” saw a huge positive change as Lagos, Rivers, Ogun and Delta all generated more internal revenue than they were fed by Abuja.

“By 2020, we were back to just Lagos and Ogun generating more internal revenue received from Abuja.This state of affairs indicates that almost all of Nigeria’s federating units are not fiscally healthy”

SBM warned that falling oil revenues have put states in precarious situations, leaving them unable to meet their basic obligations such as paying salaries, wages and pensions not to mention providing social services and infrastructure

“This has increased the urgency of states to increase their internally generated revenue in order to reduce their exposure to volatile and unreliable federal allocations. Due to a limited number of taxable businesses in the states, many state governments end up focusing their efforts on the same businesses that are already paying their fair share of taxes.

“In the end, this has the unintended effect of creating a harsh business environment for all and in some cases, forcing businesses to close due to overtaxation and/ or harassment,” it added.

It also warned that Nigeria’s telecoms industry is disproportionately overtaxed by states, citing Kogi State, adding that the telecommunications companies are made to pay up to 41 levies by the state government, including levies.

Some of the levies are annual right of way renewal; social services contribution; employee economic development levy; mast site premises renewal; fire service yearly renewal; payment of environmental levy; failure to submit an environmental impact assessment report; failure to register industry; failure to submit environmental audit report every two years; storage of petroleum products and radioactive materials without written permission from the Kogi State Environmental Protection Board and others.

What you should know

According to data from the National Bureau of Statistics, the 36 states of the federation including the federal capital recorded a sum of N849.12 billion as internally generated revenue between January and June 2021, which is 38.5% higher than the N612.87 billion recorded in H1 2020 and 26% higher than N673.82 billion recorded in H2 2020.

Lagos, Ogun States and FCT led the list with the highest internally generated revenue per population in the first half of 2021. This is according to analysis carried out by Nairalytics, the research arm of Nairametrics.

Lagos State recorded the highest IGR in the review period with N267.23 billion accounting for 31% of the total IGR recorded in the period under review.

The Federation Accounts Allocation Committee (FAAC), shared the sum of N725.571 billion to the three tiers of government, as federation allocation for the month of March.

States received N227.201 billion, the local government councils got N167.910 billion, while the oil producing states received N53.356 billion as derivation (13 per cent of Mineral Revenue).

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