In a significant shift in fiscal policy, the 36 states of Nigeria are poised to receive an unprecedented estimated N5.07 trillion in 2026, as part of a new Value Added Tax (VAT) sharing formula introduced under the National Tax Acts. This development, approved by the Federal Executive Council, marks a pivotal moment in Nigeria’s financial landscape, prompting calls for greater accountability from state governors.
Under the new framework, which takes effect in January 2026, the federal government’s share of VAT will decrease from 15% to 10%, while states will see their share rise from 50% to 55%. This structural change is expected to provide states with an additional N461.27 billion, pushing their collective allocation significantly higher than previous years. For the first time, local governments will maintain a steady share of 35%, ensuring that all tiers of government benefit from the new law.
The fiscal strategy outlined in the 2026–2028 Medium-Term Expenditure Framework indicates that while the federal government’s share will drop from N1.04 trillion in 2025 to N922.53 billion in 2026, the overall VAT pool is projected to grow from N6.95 trillion to N9.23 trillion. This growth underscores the effectiveness of the new tax law in enhancing fiscal federalism and expanding the tax base.
As states prepare to receive this substantial financial boost, it’s imperative for citizens to shift their focus from blaming the federal government for local grievances to holding their governors accountable for the management of these funds. With the financial landscape changing, there is an urgent need for transparency and effective governance at the state level
The projections for the coming years paint an even brighter picture for state finances, with VAT revenues expected to rise to N10.87 trillion in 2027 and N13.28 trillion in 2028. Correspondingly, states’ allocations will increase to N5.98 trillion and N7.30 trillion, respectively. This trajectory not only reflects the growing VAT base but also highlights the critical role state governments will play in utilizing these resources responsibly.
Nigerians must demand that their governors prioritize development, infrastructure, and social welfare programs, leveraging the newfound revenue to improve the lives of their constituents. The time has come to move beyond the narrative of federal blame and to foster a culture of accountability and responsibility among state leaders.
As the financial windfall approaches, the question remains: will state governors rise to the occasion and deliver meaningful change, or will they fail to account for the resources entrusted to them? The responsibility lies not just with the governors but with the people of Nigeria to ensure that their voices are heard and their leaders are held accountable.
