adsStates capable of attracting businesses, stimulating commerce, and formalising informal economic activity are now positioned to benefit more from stronger VAT-linked revenues over time.
By contrast, states with weak industrial activity, narrow tax bases, and low levels of private-sector investment may find themselves increasingly exposed despite temporary gains from higher allocations.
“The new VAT allocation for states essentially means that they are earning more money,” said Dumebi Oluwole, senior economist at a leading research firm.
“This provides additional revenue for state governments to meet statutory obligations such as salary payments and, more importantly, engage in meaningful capital expenditure.”
The shift is being driven by changes in how Value Added Tax (VAT) is distributed across the federation. While VAT is collected centrally, its allocation to states is increasingly influenced by factors such as consumption levels, population size, and where economic activity actually takes place. adsads
