New VAT Reforms to Hand States N4tn Annual Windfall from 2026 — Oyedele

Chairman of the Presidential Fiscal Policy and Tax Reforms Committee, Taiwo Oyedele, has projected that States could earn more than N4tn annually, from 2026 when new Value Added Tax, VAT, reforms take effect.

Oyedele made this disclosure on Tuesday at the launch of the BudgIT State of States, 2025 Report in Abuja, where he delivered the keynote address at the event also, marking the 10th anniversary of the initiative.

He stated that with VAT reforms kicking off, from 2026, States’ share will rise to 55 per cent. That could amount to over N4 trillion in 2026 and the will be: “Will this money be spent, or invested,” he queried.

The fiscal policy expert noted that while recent economic reforms had more than doubled Federation Account Allocation Committee transfers, from N5.4tn in 2023 to N11.4tn in 2024, many Nigerians were yet to feel any direct relief.

According to him, Governments’ have more money in their coffers, but households continue to struggle with reduced disposable income.

“States are receiving more money than ever before. But there is a paradox: while Governments have more Naira, ordinary Nigerians have less disposable income in their pockets,” he said.

He also urged State leaders to channel the extra revenues into projects that tangibly, improve citizens’ lives.

The BudgIT report highlighted that 21 States still rely on Federal allocations for over 70 per cent of their revenues, a trend Oyedele described as worrying.

He explained that the new tax laws, which transfer the full proceeds of electronic money transfer levies to States and exempt State Government bonds from tax, would help reduce borrowing costs and create fiscal space.

Oyedele however, acknowledged that for the first time in many years, capital expenditure had overtaken recurrent expenditure, yet, implementation in critical areas remained poor.

“States implemented only two-thirds of their education budgets, spending less than N7,000 per citizen. In health, implementation was even lower, at just N3,500 per citizen,” he observed.

On debt, he noted a reduction of N2tn in domestic obligations and a $200m fall in foreign loans, with 31 States lowering their domestic debt stock.

“According to the 2025 rankings, Anambra topped the fiscal performance table, followed by Lagos, Kwara, Abia and Edo. Cross River, however, slipped dramatically from fifth position in 2024 to 29th in 2025, raising concerns about governance choices.”

Oyedele further urged State Governments to seize the opportunity, provided by upcoming reforms to move beyond survival and ensure, shared prosperity.

Also speaking, the Deputy Governor of the Central Bank of Nigeria in charge of Economic Policy, Dr Muhammad Abdullahi, called on State Governments to entrench fiscal discipline and transparency as revenues surge under ongoing reforms.

He described the BudgIT report as an annual reference point that had “distilled hard fiscal truths, benchmarked performance and re-centred conversations on capital investment, social outcomes and fiscal credibility.”

He noted that reforms in 2024 and 2025 expanded revenues and lifted capital spending above recurrent costs, but warned that States must avoid slipping back into overhead-heavy budgets.

According to him, the apex bank’s response was to return to orthodox monetary policy, normalise the foreign exchange market and restore credibility.

In his goodwill message, Head of Economic Intelligence at the Nigerian Governors’ Forum, Razaq Fatai, who represented the Director-General, Dr Abdulateef Shittu, said the State of States report had become a valuable tool for guiding governance and promoting fiscal accountability across the country.

He explained that the NGF had served as a technical partner in refining the report over the past decade, ensuring that Governors, used the findings to improve decision-making.

According to him, “The essence of the State of States is to help, guide governance and ensure that Governors at different levels take the information provided, and make sure, it reaches their people.”

In his earlier speech, Co-founder and Global Director of BudgIT, Oluseun Onigbinde, said the State of States report had become a mirror, reflecting choices, made by subnational Governments.

Onigbinde noted that what began as an effort to make every kobo traceable had grown into a tool of accountability, embraced by both Governors and citizens.