Maybe many of us didn’t know that tax and VAT sharing are one of the areas of injustice happening in this country.
For years southerners especially the Niger Delta had been crying but each time Northern politicians will silence them.
Every president that came continued with this injustice.
But finally a man with boldness is here to fix the injustice and get every state to wake up and work or be left behind.
Here’s the specific part of Tinubu’s tax reforms related to VAT that can encourage states to work harder and grow their local economies — especially by increasing productivity and capturing more of the value created within their borders:
1. Higher Revenue Share for States.
The new tax reform reduces the Federal Government’s share of Value Added Tax (VAT) and increases the portion that goes to state governments.
States now receive 55% of VAT revenue (up from 50%).
Federal Government’s share reduced to 10%.
Local governments still get 35%.
This shift means more money stays closer to where economic activity happens — giving states a stronger incentive to boost consumption and business activity locally.
2. Performance-Based Sharing Formula.
The VAT revenue distributed to states and local governments is now to be allocated not just equally or by population, but also by where consumption actually takes place:
50% shared equally among states.
20% based on population
30% based on actual consumption
This means states that attract more economic activity (higher consumption of goods and services) can pull in more VAT revenue — creating a direct link between local economic development and revenue receipts.
👉 In practice, this encourages states to grow their own economies
— by improving the business environment, attracting investment, formalising businesses, and boosting consumer demand
— because the more taxable consumption within the state, the higher its VAT take.
3. Attribution Moves Toward Local Consumption (Original Proposal).
Earlier versions of the reform sought to attribute VAT revenue based on where consumption occurs, rather than where companies file their returns (which previously concentrated revenue to states with corporate headquarters).
This change — still part of the policy discussion — would make VAT receipts more directly tied to actual economic activity in each state, rewarding thriving local markets.
I hope this matter is fixed quickly.
Bottom Line?
Tinubu’s VAT reforms are designed to:
1. Give states a bigger slice of the VAT pie (55% vs 50%).
2. Link revenue more closely to local economic activity instead of arbitrary formulas.
3. Incentivise states to attract business, boost consumption, and improve compliance.
So if you like burn down your states and declare SIT-AT-HOME, you’re losing.
Together, these shifts create a stronger financial motivation for states to work harder at growing their own productive economies .
Because the more value that’s consumed in a state, the more VAT revenue it can keep and deploy for development.
So you see why some Lazy Governors and Senators were fighting against the Tax Reforms?
Now another side not being stated is.
These tax Reforms empower states and LGAs…
But it will not automatically translate into development if the people don’t wake up to hold the Governors accountable.
Tinubu is making the federal government less powerful and empowering states and LGAs but in our laziness we still don’t want to wake up to these realities.
The state Governors are the enemies of development in Nigeria.
If we don’t wake up to force their hands…forget it .
Your taxes will end up in foreign bank account as usual.
Ugoji Maximillian speaker, Author, Entrepreneur and believer in the beauty that’s in humanity.