States across Nigeria could earn more than N4 trillion annually starting in 2026, following the implementation of new Value Added Tax (VAT) reforms, according to Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee.
Oyedele projected his keynote address at the launch of the BudgIT State of States 2025 Report in Abuja. He stated that the reforms would increase states’ share of VAT to 55 per cent, significantly boosting subnational revenue.
“With VAT reforms kicking in from 2026, states’ share will rise to 55 per cent. That could amount to over N4 trillion,” Oyedele said.
He noted that while Federation Account transfers more than doubled from N5.4 trillion in 2023 to N11.4 trillion in 2024, many Nigerians still face economic hardship. He urged state governments to invest the additional funds in impactful projects.
The BudgIT report revealed that 21 states rely on federal allocations for over 70 per cent of their revenue. Oyedele described this dependency as concerning, though he acknowledged progress in states like Enugu and Bayelsa, which recorded 381% and 174% growth in internally generated revenue, respectively.
He highlighted new tax laws that exempt state bonds from taxation and allocate electronic money transfer levies entirely to states, helping reduce borrowing costs and expand fiscal space.
Oyedele also pointed out that capital expenditure had overtaken recurrent spending for the first time in years, but warned that budget implementation in education and health remained weak.
The report showed that states spent less than N7,000 per citizen on education and just N3,500 on health. Oyedele emphasised that borrowing was not the issue, but rather the unproductive use of debt.
Anambra led the 2025 fiscal performance rankings, while Cross River dropped from fifth to 29th, raising concerns about governance.
