Road taxes are one of the critical components of internally generated revenue (IGR) for Nigerian states.
The 2023 IGR report, compiled by the Joint Tax Board in partnership with state revenue authorities, provides insight into how these taxes contribute to state-level finances.
Road taxes are daily levies imposed primarily on commercial transport operators, reflecting the extent of road use, economic activities, and the effectiveness of tax enforcement in each state.
This revenue source plays a vital role in financing road maintenance, transportation infrastructure, and public services across regions.
A report by the National Bureau of Statistics (NBS) highlights a substantial overall increase in IGR across Nigerian states, with road taxes contributing significantly to this growth.
In 2023, the 36 states and the Federal Capital Territory (FCT) collectively generated N2.43 trillion, marking a 26% increase from N1.93 trillion in 2022.
Lagos, Rivers, and the FCT emerged as top contributors to IGR, indicating their strategic economic importance.
In 2023, Nigerian states collected a total of approximately N80.28 billion in road taxes, reflecting a significant increase from the N49.14 billion collected in 2022.
This represents a 63.4% growth year-on-year, highlighting improved tax enforcement efforts, increased economic activities, or expanded transport infrastructure in several states.
The wide variation in road tax revenue among states reflects the regional disparities in economic activities, ranging from industrial hubs like Lagos and Ogun to agricultural states like Ebonyi and Zamfara.
Also, the enforcement of transport levies serves as a gauge for a state’s ability to capitalize on commercial transport operations.
While states like Ebonyi, Zamfara, and Cross River demonstrated remarkable growth, Ogun’s decline signals that even high-performing states can experience fluctuations.
Below are the top 10 states in Nigeria based on road tax collections in 2023:
10. Rivers State – N830 million
Located in the South-South region and home to Port Harcourt, a hub for oil and gas activities, Rivers State reported no road tax revenue in 2022.
- However, in 2023, it collected N830 million, signaling either new tax enforcement policies or better compliance within the state.
- The introduction or improvement of toll systems or better coordination in tax collection likely contributed to this sudden rise.
- As one of Nigeria’s oil-producing states, Rivers benefits from heavy road usage, especially from trucks involved in oil transportation.
9. Kano State – N967.17 million
Kano, a commercial and transportation hub in the North-West, saw a slight increase of 2% in road tax revenue, from N942.91 million in 2022 to N967.17 million in 2023.
- Known for its vibrant markets and industries, the state’s economy relies heavily on goods transported across northern Nigeria.
- The modest rise suggests consistent economic activity, despite the economic challenges faced nationwide.
- This stability reflects Kano’s importance as a trade corridor for both agricultural products and manufactured goods.
8. Cross River State – N1.22 billion
Cross River, situated in the South-South and known for tourism, agriculture, and the annual Calabar Carnival, recorded an astronomical increase in road tax revenue—jumping from N137.84 million in 2022 to N1.22 billion in 2023, a growth of over 780%.
- This drastic rise likely indicates improved tax enforcement mechanisms or expanded economic activity.
- The state’s tourism and agriculture sectors might have driven more road usage, contributing to the surge in tax revenue.
7. Edo State – N1.59 billion
Edo, another South-South state, experienced a significant 66% increase in road tax collections, from N960.59 million in 2022 to N1.59 billion in 2023.
- Known for its strategic location along major transport routes connecting southern Nigeria with the north, the increase reflects intensified enforcement of road levies or improved compliance by transport operators.
- Edo’s economy, which relies on trade and transportation, likely saw more road activity, boosting tax collections.
6. Ondo State – N1.59 billion
Ondo, located in the South-West, recorded a substantial 238% increase in road tax collections, from N471.20 million in 2022 to N1.59 billion in 2023.
- Ondo is known for its cocoa production and bitumen reserves, attracting significant industrial and agricultural transport activity.
- The rise in road tax revenue might also reflect increased enforcement or economic expansion in the state’s transport sector.
5. Zamfara State – N1.61 billion
Zamfara, situated in the North-West, saw one of the largest increases in road tax collections, surging by 479% from N278.68 million in 2022 to N1.61 billion in 2023.
- Despite facing security challenges, this growth indicates significant strides in revenue collection.
- It also highlights a possible rise in economic activities, especially from mining operations, transportation of goods, or tighter enforcement policies.
4. Ogun State – N1.64 billion
Ogun, located in the South-West and renowned for its industrial zones and border proximity to Lagos, reported a 10% decline in road tax revenue, dropping from N1.82 billion in 2022 to N1.64 billion in 2023.
- This dip may reflect a slowdown in industrial activities or shifts in tax collection strategies.
- Despite the decline, Ogun remains a significant contributor to IGR due to its strategic position as a transit state for goods moving to and from Lagos.
3. Delta State – N2.60 billion
Delta, in the South-South and a key oil-producing state, experienced a modest 5% increase in road tax collections, rising from N2.48 billion in 2022 to N2.60 billion in 2023.
- The steady growth reflects consistent economic activity, particularly in oil logistics and transportation.
- Delta’s network of roads supports the movement of goods and services, and its proximity to the coast plays a crucial role in driving tax revenue.
2. Ebonyi State – N2.85 billion
Ebonyi, located in the southeast and known for its agricultural prowess, especially rice production, reported the most significant percentage growth in road tax collections.
- The state’s revenue surged by 540%, from N445.24 million in 2022 to N2.85 billion in 2023.
- This remarkable increase could be due to stronger enforcement, increased transport activity, or improved collection efficiency.
- Ebonyi’s growing transport sector and expanding economy likely contributed to the surge in tax collections.
1. Lagos State – N16.74 billion
Lagos, Nigeria’s economic hub and the commercial nerve centre of West Africa, unsurprisingly tops the list with an impressive N16.74 billion in road tax revenue for 2023.
- Although no comparable data was available for 2022, this figure highlights Lagos’ reliance on its extensive transport network and bustling economy.
- The state’s roads support a high volume of commercial activities, with vehicles ranging from personal cars to commercial trucks contributing to its tax revenue.
- The significant collection highlights Lagos’ status as the largest economy in Nigeria.