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Lagos, Ogun only states that can survive without FAAC —Report

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A report has once again revealed the precarious financial mess Nigerian states are battling with amid the Federal government’s dwindling revenue.

The report prepared by SBM intelligence titled ‘taxing Nigeria’s subnational economies to oblivion’ revealed that only Lagos and Ogun states in four years (2017-2020) made more Internally Generated Revenue (IGR) than the allocations received from the Federal Government.

It, therefore, warned that the current condition of the states’ IGR was not healthy.

Part of the report released on the company website reads: “By 2018, Osun State had fallen off the list, as 2019” saw a huge positive change as Lagos, Rivers, Ogun and Delta all generated more internal revenue than they were fed by Abuja.

“By 2020, we were back to just Lagos and Ogun generating more internal revenue received from Abuja. This state of affairs indicates that almost all of Nigeria’s federating units are not fiscally healthy”

Read also :New FAAC sharing formula will see Nigerian govt share drop by 3.33%

SBM warned that falling oil revenues have put states in precarious situations, leaving them unable to meet their basic obligations such as paying salaries, wages and pensions not to mention providing social services and infrastructure.

“This has increased the urgency of states to increase their internally generated revenue in order to reduce their exposure to volatile and unreliable federal allocations.

“Due to a limited number of taxable businesses in the states, many state governments end up focusing their efforts on the same businesses that are already paying their fair share of taxes.

“In the end, this has the unintended effect of creating a harsh business environment for all and in some cases, forcing businesses to close due to over taxation and/ or harassment,” it added.

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