BudgIT, a civic organization has released what it say is a list of best and worst performing states amid the Value Added Tax controversy.
According to BudgIT only three states in Nigeria can survive without support from the Federal Government.
It disclosed this in its ‘State of States, 2021 edition: titled Fiscal Options for Building Back Better’ released on Tuesday.
The report is similar to Ripples Nigeria’s earlier report, on how only three Nigerian states can generate up to 50 percent of their running costs.
While Ripples Nigeria report focused on how much each state can generate without allocation from the federal government which also includes VAT, BudgIT in its analysis used IGR and VAT for its analysis.
BudgIT analysis revealed that only Lagos, Rivers, and Anambra can survive with IGR and VAT.
Our report ranked, Lagos, Abuja, and Ogun with having at least enough to attend to operation needs.
Part of BudgIT report reads, “Only three states in the country can meet their operating expenses obligations with a combination of their IGR and Value Added Tax as measured in our ‘Index A’ ranking; these states are Lagos, Rivers, and Anambra and they appear at the top of the ‘Index A’ ranking.”
“States that rank high on its index A have comparatively limited dependence on federally distributed revenue for their operations and are more viable with the capacity to exist as independent entities.
Budgit also revealed that among the 36 states Benue, Taraba, and Bayelsa states are the bottom three states.
BudgIT said, “These states at the bottom of ‘Index A’ ranking include Jigawa, Delta, Benue, Taraba and Bayelsa.
“Nevertheless, all Nigerian states still need to work hard to build economic prosperity and create more jobs in their states to ensure that there is more money in circulation and economic activities that can be taxed to improve their IGR.”
BudgIT report also showed that all 36 states saw a 3.43 percent decline in their 2020 IGRs (N1.21tn) from (N1.26tn) in 2019.
It also noted that 18 states saw a decline in their year-on-year revenues, while the remaining 18 states grew their revenues – in some cases by as high as 87.02 percent.
BudgIT further added that the total debt burden of the states increased by N472.63bn (or 8.78 percent) from N5.39tn in 2019 to N5.86tn in 2020.
IT said the increase in total subnational debt was as a result of exchange rate volatility, with the value of the naira jumping from 305.9/$1 in 2019 to 380/$1 as of December 31, 2020.
The organisation said that the states with the highest foreign debt were Lagos, Kaduna, Edo, Cross River, and Bauchi.
It added that Lagos, Kaduna, Anambra, Benue, and Zamfara accounted for more than half (63.63 percent or N300.7bn) of the net year-on-year subnational debt increase of N472.63bn.
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