States in Nigeria may receive over N4 trillion annually beginning in 2026, thanks to upcoming VAT reforms that will increase their share of the tax to 55 percent.
This projection was made by Taiwo Oyedele, Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, during the launch of the BudgIT State of States 2025 Report in Abuja.
Oyedele stated that the reforms present a critical opportunity for states to transition from a survival mode to long-term prosperity. He warned, however, that the real challenge lies in how the funds will be used.
“Will this money be spent, or will it be invested?” he asked, noting that while government revenues have surged, citizens still face declining disposable income.
The BudgIT report showed that 21 states remain heavily dependent on federal allocations, with over 70 per cent of their revenue coming from the centre. Oyedele called for stronger internal revenue systems and better fiscal discipline.
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He cited Enugu and Bayelsa as examples of progress, with significant growth in internally generated revenue. He also highlighted reforms that exempt state bonds from tax and allocate electronic transfer levies fully to states.
Despite increased capital spending, Oyedele warned that implementation in key sectors remains poor. States spent less than N7,000 per citizen on education and under N3,500 on health, with only two-thirds of education budgets executed.
He stressed that borrowing is not inherently problematic, but the misapplication of debt is. The report noted a reduction in domestic and foreign debt, yet states still owe over N1.2 trillion in arrears.
The CBN’s Deputy Governor, Dr Muhammad Abdullahi, also spoke at the event, urging states to maintain fiscal discipline, digitise their revenue systems, and improve budget execution.
The report ranked Anambra highest in fiscal performance, while Cross River fell sharply, raising concerns about governance choices.
