Imagine a family dinner where everyone has to split the food. Now, picture one sibling suddenly suggesting a new rule: “I get more food because I did more in the kitchen”. Fair? Some might say yes, but others might argue it’s a betrayal of family values.
This is the crux of the uproar over Tinubu’s new tax reform bill, especially among northern governors. The bill changes how Nigeria’s FAAC (Federation Account Allocation Committee) distributes revenue—a move that has left some leaders uneasy. Let’s unpack what’s happening.
Slide 2: Where Does FAAC Money Come From?
To understand the tension, let’s look at the pot of money everyone’s arguing over. FAAC revenue comes from:
- Oil Sales: Nigeria’s “black gold.”
- Company Income Tax (CIT): What businesses pay on profits.
- Custom Duties: Taxes on imported goods.
- Value Added Tax (VAT): A consumer tax added to nearly everything you buy.
For this journey, we’ll focus on VAT, the key battleground in this debate.
Slide 3: VAT 101 – The Tax You Didn’t Know You Paid
Every time you buy a loaf of bread or a phone charger, a small percentage of that price goes to the government as VAT. It’s a sneaky tax because it’s already baked into the price tag. Businesses collect it from you, then send it off to the government.
Slide 4: How VAT Is Currently Shared
Here’s the current system:
- Federal Government: Takes 15%.
- States and Local Governments: Share the remaining 85%.
Now, that 85% is split further:
- 20%: Based on how much VAT a state generates.
- 30%: Shared by population size.
- 50%: Shared equally among states
This system ensures that both high-earning states and less economically active ones get a slice of the pie.
Slide 5: Tinubu’s Big Idea – The Proposed Tax Reform
Enter Tinubu’s bill, which flips the script. Instead of states getting just 20% based on their contributions, they’ll now get 60%. States like Lagos, which generate the bulk of Nigeria’s VAT, stand to gain big.
Slide 6: Enter Lagos – The VAT Powerhouse
Lagos is the rockstar of VAT, contributing nearly 55-60% of the national total. Under the new rules, Lagos would claim a lion’s share of the VAT pie. Think about it:
- If Lagos generates 56% of VAT, it gets over half of that 60%.
- Add Lagos’s huge population, and its slice grows even bigger.
This makes sense to Lagosians—they argue they’ve earned it. But to the north, this is a red flag.
Slide 7: But Hold On. Let’s dig a little deeper on VAT
Remember how we said VAT comes from nearly everything you buy? Here’s where it gets a bit tricky. VAT isn’t just about the price tag—it’s about where that price tag is “counted.”
Let’s use MTN as an example. You’ve got people buying airtime in Bauchi, making calls in Port Harcourt, and streaming videos in Enugu. But because MTN’s headquarters is in Lagos, all the VAT from those activities gets filed in Lagos. The result? Lagos’s VAT revenue balloons, while the states where the services were actually consumed barely get a crumb.
This isn’t just about MTN. It’s the same for banks, manufacturing companies, and big retail chains. If their headquarters sit in Lagos, that’s where the VAT lands—even if customers across Nigeria are the ones footing the bill.
Slide 8: Northern Governors’ Beef with Lagos
Here’s the northern perspective:
- Historical Advantage: Lagos was the former capital, heavily funded by federal money.
- Seaports: Goods cleared in Lagos (even if headed to Kano) generate VAT there.
- Border Closures: Northern states with borders suffer from trade restrictions.
States like Jigawa ,Yobe with low VAT contributions and populations, fear they’ll struggle to pay salaries and provide basic services. They ask: “How do we survive in this new system?”
Slide 9: The Case for Keeping What You Earn
Down south, there’s a feeling of frustration. They’re saying, “We’re the ones hustling the hardest, so why is the reward shared equally?” Imagine running a marathon, crossing the finish line first, and still getting the same medal as the person who came last.
For states like Lagos and Rivers, the VAT powerhouses, this bill feels like justice—a way to finally channel their hard-earned revenue into their own development.
Slide 10: “Why Ban it but Still Want a Cut?”
Here’s another southern gripe: VAT from alcohol. In many northern states, alcohol is banned on religious or moral grounds. Yet, the revenue it generates in southern states ends up in the same pot, benefiting everyone.
“Why should they share in money made from something they don’t even allow?” ask supporters of the reform. For them, this bill is about fairness—a state should get a bigger slice of what it actually contributes.
Slide 11: But Whose VAT Is It Anyway? A Question of Fairness
Now, here’s where it gets thorny. If a phone call is made in Adamawa but logged in Lagos, how fair is that really? Northern states argue they’re being shortchanged. They might not have the flashy headquarters or mega-factories, but their consumers are driving the profits too. Shouldn’t that count for something?
On the flip side, Lagosians would argue, “Wait a second! We’re not just a tax collector—we’re the heartbeat of commerce. Those headquarters didn’t pop up here by accident; they came because Lagos offers the infrastructure, ports, and networks that make business possible.”
So, who’s right? Is it about where the money comes from or where it’s spent? It’s a VAT debate that’s as complicated as it sounds, and the answer might depend on which side of the bridge you’re standing on.
Slide 12: Unity or Meritocracy? The Heart of the Debate
Alright, so should we prioritize helping smaller, less developed states catch up? Or should we reward big earners for their efforts?
The northern states are fighting for balance—no state left behind. The southern states? They’re fighting for recognition—rewarding hustle.
Is there a middle ground? Can both sides get what they need without fracturing the nation’s unity?
Slide 13: What’s Your Take?
This isn’t just about governors and tax bills. It’s about you, your community, and the kind of Nigeria you want to see.
Do we share everything equally? Or should we reward performance and output?
Get curious. Ask questions. Join the conversation. Because these decisions shape not just policy, but the roads we drive on, the schools we build, and the future we create.
Your voice matters. Be Involved
