₦airaland Forum

Low VAT Doesn’t Mean Low Economic Contribution: The South East Nigeria Case

I’ve been seeing repeated posts comparing VAT contributions from different regions, with some arguments implying that higher VAT automatically equals higher economic contribution. That conclusion is misleading, and it needs clarification.

In the U.S., for example, there is this well-known pattern: Republican-controlled states generally prefer lower income taxes and smaller government, while Democrat-controlled states tend to impose higher taxes to fund more public services. Neither of these models is superior — they simply reflect different economic structures and policy priorities.

The same logic applies when discussing VAT contributions in Nigeria, especially in the South East.

The South East contributes heavily to the economy through low unemployment driven by entrepreneurship, not through heavy consumption or large government-funded spending. The region’s economy is dominated by traders, manufacturers, transporters, artisans, and small business owners who are actively producing, distributing, and creating value that circulates throughout the country.

To be clear, VAT is a consumption tax, not a productivity tax. It is generated when goods and services are purchased through formal retail channels. Regions with large retail chains, high consumer spending, and concentrated government expenditure will naturally generate more VAT.

Regions with more emphasis on production, capital reinvestment, informal and semi-formal trade networks, and business expansion will generate less VAT — even when economic activity is high.

This clarification is important.

Many Nigerians on the one hand have been arguing in favor of resource control so that states with more natural resources can develop locally, while states with fewer natural resources compete through tourism, hospitality, trade, and business incentives. That diversity of economic models is normal in any federation.

VAT figures alone cannot — and should not — be used to rank economic value or contribution.

Low VAT is not evidence of low economic activity. It is evidence that economic activity is structured differently.

Finally, we must move away from this persistent attempt to demonize the South East and Igbos, usually orchestrated by a well known group of people. Economic debates should focus on facts, not stereotypes or selective metrics designed to push a an agenda.

By Givedemwotowoto

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SE contributes heavily through low unemployment from entrepreneurship, not by heavy consumption and big government spending.

let me park here and wait for the gbas gbos that will come

Explanation don start even when nobody ask you, abi who ask you? You go explain tire.

Shey baby factory merchants dey pay VAT ni?

Noted.

more characters needed.

Twenty more characters

Bring it on. Let's reduce the noise out there

Using VAT remittance to determine economic contribution be very controversial.

Understand the principles behind VAT deductions and the Administration of VAT will help one with better understanding.

No doubt that Lagos houses the head office for most of the multi national companies and banks and other national big entities. But the products and services of those companies are consumed nationwide, while the VAT is collected and remitted centrally at the head office, just for convenient administrative sake.

So relying only on VAT contribution per region or state could be misleading. Rather a step should be taken further to breakdown the rate of consumption or propensity to consume by each region/state enhance understanding.

You guys Sha like justifying things that didn't favour or go the way of SE.

So this justification now, what has it added to the VAT contributed.

Let all of us learn to embrace whatever is our reality and strive to improve in every aspect.

My 50 Cent.

lol! you go explain and defend tire. We all know you wouldnt have put this up if it were your favourite "leeches" at the bottom of the table 😂

The simple reasons the south East will forever be at the bottom of the table are :

1. They are everywhere, scattered like broken beads. Most of their businesses aren't located in the East

2. The south East is not attractive for investment. Insecurity, intolerance and so on..

This is saying it as it is!

kollog:
You guys Sha like justifying things that didn't favour or go the way of SE.

So this justification now, what has it added to the VAT contributed.

Let all of us learn to embrace whatever is our reality and strive to improve in every aspect.

My 50 Cent.

.

Shey fake drugs manufacturing kiosks dey pay VAT ni?

This is a non issue considering Igbo are the most enterprising tribe in Africa. Africa o...not Nigeria.

You don't compare apples with oranges.

What confuses many of you Igbos listening to Nigerian government's anti-Igbo rhetoric and marginalization is you're unaware that there's nothing like Southeast with respect to Igbo nation. Nigeria politically sequestered marginal Igbo clans into 8 different states to minify Igbo influence and cheat us with fake statistics and data. But a day of reckoning is coming.

Spreading the igbo nation into 13 states with only central Igbo land termed SE is their cheat sheet. Igbo considering decades of punitive action juxtaposed with our accomplishment are head and shoulders ahead of our adversaries.

Igbo haters from the SW would tell you there are no Igbo in the so-called SS, but if you ask them why they joined Fulani to hate on Igbo and call the January 66 coup led by a SS Igbo an Igbo coup, they'll be confused. No be confused entities them be?

VAT simply means U de tax Ur people too much

Una go explain tire……..until you clowns start putting your money where your mouth is, you clowns will remain a joke…….ndi billionaire wey no fit show working but just empty noise of being the richest, the most this, the most that😂

I have been seeing the comparison since APC came into power.

Very disturbing

Nice explanation. Great perspective. Well done.

Akwamkpuruamu:
VAT simply means U de tax Ur people too much

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Go school, una no go hear. See as you dey disgrace yourself for internet now

We need to add some IQ test before allowing people to comment here. Comments from these dundies are getting irritating

RichBoy247:
Explanation don start even when nobody ask you, abi who ask you? You go explain tire.

Shey baby factory merchants dey pay VAT ni?

kollog:
You guys Sha like justifying things that didn't favour or go the way of SE.

So this justification now, what has it added to the VAT contributed.

Let all of us learn to embrace whatever is our reality and strive to improve in every aspect.

My 50 Cent.

Wealth reinvested into business expansion reduces unemployment and directly adds to production. School no be scam.

the same content many times.
19. Don't

Lol with how you guys always attribute ehn Economic hub, the biggest market in West Africa...


So in one word all the big this and that are just big for nothing without adding anything to the purse...


If truly you guys are the economic hub and the biggest market in West Africa it will show on your Vat cause you can't be the biggest and be selling and Govt won't take out of it....

You can't defend with fake statistics. According to NBS, the south east has the highest unemployment rate in Nigeria, with Abia being the highest at 18.7% in 2023.

Allow Agbadoes to be gloating

kollog:
You guys Sha like justifying things that didn't favour or go the way of SE.

So this justification now, what has it added to the VAT contributed.

Let all of us learn to embrace whatever is our reality and strive to improve in every aspect.

My 50 Cent.

It's convenient for you lot to keep mouthing how the SE has the lowest population but you want that same low population to generate the highest VAT in the country. Because of the geographical advantage of Lagos the Igbo invested massively and generate vat for lagos state. All the goods being sold in SE pay vat to Lagos state. Even all the banks and multinational companies in SE pay vat to lagos, Abuja or portharcourt where their head office is situated.

Igbos pay substantial vat in major cities like Kano, Ibadan, Asaba, Sapele, warri, Ogun etc..

This is one discussion you lot don't wanna have because it doesn't fit into your narratives.

Grammar only
.. make we separate make everybody go their separate ways

Hmmmm… these people, sha! They always like to take the first position in everything so they can brag about it, and when it doesn’t go their way, they start giving all forms of explanations and excuses!

The person who wrote this clearly doesn't know what he is saying; comparing state government-imposed taxes by Republican and Democrat parties in their respective states to the Federal government VAT, which is the same 7.5% in every state in Nigeria, is not even related. They are two different types of taxes.

They say VAT is a consumption tax; you are talking about entrepreneurship. In that case, what of the millions of tons of agricultural produce from the North that does not have VAT? So should the northerners also come out and be wailing that their VAT was not calculated well?

Spin it like spinach darling. No be you? The perennial self acclaimed victim claims the data is demonizing. A data that shows the whole country regions.

RichBoy247:
.

Shey fake drugs manufacturing kiosks dey pay VAT ni?

Now is not the time for kiddies jokes this is grown up stuff go and do your homewitk and stop commenting on issues above your thought process.

I disagree.
Consumption is CRITICAL to economic development.

I remember when China started it's massive economic expansion, the fears then was very low domestic consumption (as a result of many factors) and the Chinese Communist Party had to deliberately policy it's way to opening up the domestic market because that is what guaranteed sustainable economic expansion. Today the Chinese are the top ten consumers of most articles in the global marketplace.

In a nutshell if you are not consuming your production will stall down the line as soon as inventories overwhelm the supply chain.

Moreover in the very economically advanced countries consumption, spending, as a metric is a barometer of economic health and a predictor of future economic growth.

If states in the Eastern part of this country are saying they produce lots of stuff but do not consume much, there is something fundamentally wrong with that. It simply means such production is not creating wealth.

I can understand the argument that what is called 'west' is essentially Lagos and to some extent Ogun, both of which are highly cosmopolitan, urbane states and contain residents of all tribes and tongues living, intermingling and conducting business far removed from the sectarian pictures those who love tribalism love to paint.

But one cannot divorce consumption from productivity. If you produce you create wealth and wealth finds expression in what and how much you spend.