Taiwo Oyedele: VAT reform will increase states’ share to 55%

Taiwo Oyedele, chairman of the presidential committee on fiscal policy, says the upcoming value-added tax (VAT) reform will increase states’ share of VAT from 50 percent to 55 percent, translating to over N4 trillion by 2026.

Oyedele spoke at the launch of BudgIT’s 2025 States of States report released on Tuesday.

President Bola Tinubu signed four tax reform bills into law on June 26, but they will take effect on January 1, 2026.

Speaking further, Oyedele said there is a need for deeper revenue reform and a rethink of Nigeria’s fiscal federalism, as simply giving more resources to subnationals without reform will not solve the issue.

He said it is time for the government to rebalance fiscal priorities, shifting decisively from mere spending to strategic investments, particularly in critical sectors like education and health.

“Develop a spending framework, carry out budget reforms that compel the right behaviour in public and actual management and it’s not down to individual preferences or who is in power at the time,” he said.

“Also we must drive better accountability, especially at local government levels.”

Oyedele also advocated for a debt strategy that involves borrowing responsibly for infrastructure and productivity, rather than for recurring spending.

“We need to adopt a strategy that I call a net financial position. What that means is for every naira and every dollar we borrow, we must create value that is much more than the cost of the debt,” he said.

“That way we add value every time. Our debt automatically becomes sustainable. No other person is necessary if we are able to do that.

“We need to adopt that positive net financial position as our debt strategy. States should borrow to build, not borrow to spend.

“And we must ask critical questions as a state. Should I build an airport or should I build primary schools? Should I build a modern mall or should I build a road from the farm to the market?”

He also said Nigeria’s spending habits need a rethink, noting that sometimes, the country spends more money commissioning projects than what was used for the project.

Oyedele added that 30 states recorded at least a 200 percent increase in internally generated revenue (IGR) over 10 years, but despite this fiscal expansion, poverty remains a challenge, and to address this paradox, growth must be inclusive.