Lagos moves to take control of VAT, joining fight over Nigeria's wealth

Defending his state's stance from criticism by other states earlier this week, Rivers Governor Nyesom Wike said the current system was unjust. He said that in June, 15.1 billion naira ($37 million) in taxes were collected in Rivers and 46.4 billion in Lagos, and those states had received 4.7 billion and 9.3 billion respectively.

Lawmakers in Nigeria's commercial hub Lagos passed a state law on Thursday designed to allow the state government to collect value-added tax (VAT) rather than leaving it for a federal agency, joining a battle over how the nation's wealth is shared. The move by the Lagos State Assembly follows an announcement by oil-producing Rivers State earlier this week that it would begin collecting VAT itself rather than the Federal Inland Revenue Service (FIRS) doing it.

Under the current system, the FIRS collects VAT and other taxes nationwide and pools the revenue centrally before redistributing it to the 36 states according to an agreed formula. Richer states like Lagos and Rivers have long complained that they were being short-changed and should be allowed to retain more of the wealth they generate, but poorer states are strongly resistant to any change.

The FIRS has gone to court to challenge the move by the states to wrest control of VAT. It has said it would continue to collect VAT itself until the matter was resolved, possibly by the Supreme Court. Defending his state's stance from criticism by other states earlier this week, Rivers Governor Nyesom Wike said the current system was unjust.

He said that in June, 15.1 billion naira ($37 million) in taxes were collected in Rivers and 46.4 billion in Lagos, and those states had received 4.7 billion and 9.3 billion respectively. In contrast, Wike said, Kano State in the arid North generated 2.8 billion naira and was allocated the entire amount of 2.8 billion. ($1 = 410.9000 naira)