The federal government generated a total of N1.56 trillion from Value Added Tax (VAT) in the second quarter of 2024, reflecting a 9.11% increase from the N1.43 trillion collected in the first quarter.
This increase highlights the continued growth in the government’s revenue collection from VAT as businesses and consumers contribute to the economy.
According to the National Bureau of Statistics (NBS) report, VAT collection was broken down into three main categories: local payments, foreign VAT payments, and import VAT. Local VAT payments amounted to N792.58 billion, while foreign VAT payments contributed N395.74 billion. Additionally, import VAT added N372.95 billion in the second quarter, showing a balanced contribution from various sectors of the economy.
“On a quarter-on-quarter basis, human health and social work activities recorded the highest growth rate with 98.44%, followed by agriculture, forestry, and fishing with 70.26%, and water supply, sewerage, waste management, and remediation activities with 59.75%,” NBS reported.
These sectors played a crucial role in boosting the government’s VAT revenue.
However, not all sectors performed as strongly. “Activities of households as employers, undifferentiated goods and services producing activities of households for own use had the lowest growth rate with 46.84%, followed by real estate activities with 42.59%.” These lower growth rates indicate that certain areas of the economy are experiencing slower growth, contributing less to the overall VAT collection.
In terms of sectoral contributions to VAT revenue, manufacturing led the way with an 11.78% share, followed by information and communication with 9.02%, and mining and quarrying with 8.79%.
On the other hand, activities such as “households as employers” and extraterritorial organizations and bodies contributed the least, with 0.00% and 0.01%, respectively.
Despite these variations, VAT collections in Q2 2024 saw a significant year-on-year increase of 99.82% compared to Q2 2023, reflecting overall economic growth and improved tax collection mechanisms across various sectors.
This impressive increase in VAT revenue underlines the growing importance of taxation in funding national development.
