In 2021, Nigerians in the 36 states that make up the federation paid N1.23 trillion in taxes, a 19.19% increase over the N1.03 trillion paid in 2020.
This is in accordance with information from the National Bureau of Statistics’ most current Internally Generated Revenue report for the States. The figures show that tax receipts made up 64.88 percent of N1.89 trillion in 2021 and 66.16 percent of the state’s IGR (N1.56 trillion) in 2020.
The numbers show that a significant portion of state revenues come from taxes. Pay As You Earn, direct assessment, road taxes, and other taxes paid by citizens of a state were among those levied.
Lagosians paid N405.08bn while the FCT paid N131.93bn in taxes. Others are: Rivers (N115.74bn), Delta (N70.78bn), and Ogun (N36.72bn) who alongside Lagos and the FCT paid the most taxes.
Ekiti (N7.55bn), Kebbi (N7.39bn), Abia (N6.51bn), Yobe (N6.09bn), and Taraba (N4.54bn) paid the least taxes. While tax revenues have increased year-on-year, states are largely unable to sustain themselves on these revenues and other sources of income. Most of them continue to rely on federal allocations.
In its ‘State of States (2022 edition)’ report, BudgiT, a data firm, said, “Having been inundated with fiscal shocks from the Covid-19 pandemic in 2020 which plummeted government revenues, the 36 states of the federation commenced a rebound as the cumulative revenues of the states grew by 9.19 per cent from the N4.69tn earned in 2020 to N5.12tn in 2021.
“Cumulatively, there was a 33.66 per cent year-on-year growth in the aggregated Internally Generated Revenue (IGR) of the 36 states, from N1.2trn in 2020 to N1.61tn in 2021.
“However, the bulk of the states still rely heavily on federally distributed revenues to implement their budgets. While at least 50 per cent of the total revenue of 33 states were federal transfers, 13 states relied on federal transfers for at least 70 per cent of their total revenues.
“Being faced with declining revenues owing to Nigeria’s subsidy regime and the volatile price of crude oil, over-reliance on federal transfers is becoming increasingly unsustainable. Hence states as a matter of urgency need to wean themselves off the dependence on federally distributed revenues by significantly improving their capacity to mobilise revenues internally.”
In an earlier interview, a professor of Economics and Public Policy at the University of Uyo, Akpan Ekpo, had said states must focus on employment-creating investments in order to increase their tax revenues.
He said, “States need to attract investments. When people have jobs, they pay tax. If an individual doesn’t have a job, they cannot pay PAYE tax.
“There is high unemployment in every Nigerian state. If the states increase employment, bring in investors, start companies, foreign direct investment comes in, people will work, and they will pay tax.”
