As Nigeria’s tax reform gathers pace, subnational governments are recalibrating their fiscal playbooks and the results could reshape federal-state relations for decades.
For decades, Nigeria’s 36 states have leaned heavily on monthly allocations from Abuja. But under the Tinubu administration’s tax overhaul, that dependency may soon be tested.
The Presidential Tax Reforms Committee has proposed a unified framework that encourages states to boost their internally generated revenue (IGR) through digital tax collection and improved compliance systems. The idea is to reward efficiency and curb leakages.
Ogun, Lagos, and Kaduna States already lead in IGR, thanks to digitization and better enforcement. “We’ve seen how technology can double state revenue without new taxes,” says Kaduna’s Finance Commissioner, Shizzer Bada. “What we need now is uniformity across states.”
But not all regions are prepared. States with weaker economies especially in the North-East and North-West worry about being left behind. “Uniform tax policies can’t work where economic realities differ,” argues an analyst from the Centre for Fiscal Studies. “The federal government must balance ambition with regional equity.”
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Meanwhile, the Nigeria Governors’ Forum (NGF) has welcomed the reforms but urged that states be given more control over tax revenues. The conversation is reigniting old debates about fiscal federalism who collects what, and who spends how much.
If implemented carefully, experts believe Tinubu’s reforms could strengthen the federation by giving states more financial autonomy. But if mishandled, it could widen existing inequalities.