The Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Mr Taiwo Oyedele, has projected that states could earn more than N4tn annually from 2026, when new Value Added Tax reforms take effect.
Oyedele made this disclosure on Tuesday at the launch of the BudgIT State of States 2025 Report in Abuja, where he delivered the keynote address.
The event also marked the 10th anniversary of the initiative.
He said, “With VAT reforms kicking in from 2026, states’ share will rise to 55 per cent. That could amount to over N4 tn in 2026. The question is: will this money be spent, or will it be invested?”
The fiscal policy expert noted that while recent economic reforms had more than doubled the Federation Account Allocation Committee transfers, from N5.4tn in 2023 to N11.4tn in 2024, many Nigerians were yet to feel any direct relief.
According to him, governments now have more money in their coffers, but households continue to struggle with reduced disposable income.
“States are receiving more money than ever before. But there is a paradox: while governments have more naira, ordinary Nigerians have less disposable income in their pockets,” he said, urging state leaders to channel the extra revenues into projects that tangibly improve citizens’ lives.
The BudgIT report highlighted that 21 states still rely on federal allocations for over 70 per cent of their revenues, a trend Oyedele described as worrying.
However, he pointed to examples of progress, including Enugu’s 381 per cent growth in internally generated revenue and Bayelsa’s 174 per cent rise.
He explained that the new tax laws, which transfer the full proceeds of electronic money transfer levies to states and exempt state government bonds from tax, would help reduce borrowing costs and create fiscal space.
“This is a unique opportunity for states to build resilience, close existing tax gaps, and invest in infrastructure,” he stressed.
The keynote speech also drew attention to the mismatch between spending and outcomes. Oyedele acknowledged that, for the first time in many years, capital expenditure had overtaken recurrent expenditure.
Yet, he warned that implementation in critical areas remained poor.
“States implemented only two-thirds of their education budgets, spending less than N7,000 per citizen. In health, implementation was even lower, at just N3,500 per citizen,” he observed.