By Hunvio Elizabeth There is some serious talk going on about the future of our pockets here in Nigeria, and it looks like state government...
By Hunvio Elizabeth
There is some serious talk going on about the future of our pockets here in Nigeria, and it looks like state governments—including our very own Lagos State—are about to get a massive boost in their bank accounts.
According to the latest breakdown from the 2026–2028 fiscal plan approved by the Federal Government, the 36 states are set to receive a whopping N5.07 trillion as their share of Value Added Tax (VAT) in 2026. If you’re wondering why this is a big deal, it’s because a brand-new tax law is changing the way money is shared across the country.
The New Sharing Formula Starting in January 2026, the Federal Government is basically taking a step back to let the states have more. Their share of the VAT pool is dropping from 15 percent down to just 10 percent. That extra 5 percent is going straight to the states, pushing their portion up to 55 percent. Local governments aren't left out either; they’ll keep their 35 percent share, which is also expected to grow as more people use digital payments.
Why Is This Happening? The whole idea behind this "National Tax Act" is to make sure money stays closer to where it’s actually being generated. For a place like Badagry, where we have a lot of trade and tourism, this could be a game-changer. The goal is to give states and local councils more "fiscal muscle" to handle their own development without always running to Abuja for every kobo.
The "But" in the Story While this sounds like great news for the states, there’s a bit of a catch. Experts, including the folks at the Nigeria Economic Summit Group and the IMF, are pointing out that the Federal Government might actually lose a lot of revenue because they decided not to increase the VAT rate itself.
Right now, the government is trying to be careful not to make life harder for people, especially with food prices and poverty being such big issues. They’ve decided to keep the tax rate the same for now, but that means there’s less total money for the central government to play with.
What This Means for Us in Badagry The big question everyone is asking—including the Tax Reform Chairman, Taiwo Oyedele—is: what will the states do with all this extra cash?
For us here, more money for the state and local government should ideally mean better roads, improved health centers, and more support for our local schools. As we approach 2026, the challenge will be making sure this "VAT windfall" actually reaches the grassroots and isn't just swallowed up by administrative costs.
It’s an interesting time for our economy, and we’ll definitely be watching to see how Lagos State plans to invest its share of that N5 trillion in communities like ours.
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