Chairman of the Federal Inland Revenue Service (FIRS), Dr. Zacch Adedeji, has criticized the current distribution of value-added tax (VAT) proceeds.
He highlighted the disproportionate allocation where Lagos, Rivers, Oyo, and the Federal Capital Territory (FCT) receive over 70% of the VAT due to the concentration of company head offices in these areas.
During an interactive session with members of the House of Representatives, Dr. Adedeji revealed that 42% of October's VAT was allocated to Lagos alone.
He argued that this structure is unfair to the other 34 states, stating, "The existing VAT distribution structure does not serve Nigeria’s best interests."
He emphasized that while these regions host the head offices of many revenue-generating companies, 70% of Nigerians who consume the products and services provided by these companies are spread across the country.
Dr. Adedeji proposed tax reform bills aimed at a fairer distribution of VAT based on consumption rather than company location.
He noted, "What the bill seeks to correct is that the existing structure does not represent the interest of either the President or the nation."
The proposed reforms have sparked mixed reactions among lawmakers.
Some, like Babajimi Benson from Lagos, expressed concerns about the potential impact on their states' revenues.
Others, such as Adamu Yusuf Gagdi from Plateau, questioned how conflict-displaced citizens in the North could benefit from VAT proceeds tied to consumption.
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