Road taxes are one of the critical components of Internally Generated Revenue (IGR) for Nigerian states.

The 2023 IGR report, prepared by the Joint Fiscal Council in partnership with state tax authorities, provides insight into how these taxes contribute to statewide finances.

Road taxes are daily charges imposed mainly on commercial transport operators, reflecting the extent of road use, economic activities and the efficiency of tax enforcement in each state.

This source of income plays a vital role in financing the maintenance of roads, transport infrastructure and public services in the regions.

A report by the National Bureau of Statistics (NBS) reveals a substantial overall increase in IGR in Nigerian states, with road tolls contributing significantly to this increase.

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 FCT emerged as the top contributors to IGR, indicating their strategic economic importance.

In 2023, Nigerian states collected a total of about N80.28 billion in road tax, reflecting a significant increase from the N49.14 billion collected in 2022.

This represents a 63.4% year-over-year increase, highlighting improved tax enforcement efforts, increased economic activities or expanded transportation infrastructure in several states.

The wide variation in road tax revenue between states reflects regional disparities in economic activities, ranging from industrial hubs like Lagos and Ogun to agricultural states like Ebonyi and Zamfara.

Also, the application of transport charges serves as an indicator of a state’s ability to capitalize on commercial transport operations.

While states like Ebonyi, Zamfara and Cross River have shown 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 collection 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 toll revenue in 2022.

• However, in 2023, it raised 830 million lei, signaling either new tax enforcement policies or better compliance within the state.
• The introduction or improvement of taxation systems or better coordination in tax collection probably contributed to this sharp increase.
• As one of Nigeria’s oil-producing states, Rivers benefits from heavy road use, especially by trucks involved in the transportation of oil.

9. Kano State – NA 967.17 million

Kano, a trade and transport hub in the North West, has seen a slight 2% increase 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 growth suggests consistent economic activity despite economic challenges facing the country.
• This stability reflects Kano’s importance as a trade corridor for both agricultural and manufactured goods.

8. Cross River State – 1.22 billion No

Cross River, located in the South-South and known for tourism, agriculture and the annual Calabar Carnival, has seen an astronomical increase in road tax revenue — jumping from N137.84 million in 2022 to N1.22 billion in 2023 , an increase of over 780%.

• This drastic increase probably indicates improved tax enforcement mechanisms or expansion of economic activity.
• The state’s tourism and agriculture sectors could have led to greater road use, helping to increase tax revenue.

7. Edo State – N1.59 billion

Edo, another south-south state, recorded a significant 66% increase in road toll collection from N960.59 million in 2022 to N1.59 billion in 2023.

• Known for its strategic location along the main transport routes linking southern Nigeria to the north, the increase reflects intensified road tax enforcement or better compliance by transport operators.
• Edo’s economy, which is based on trade and transport, probably saw more road activity, increasing tax collection.

6. Ondo State – N1.59 billion

Ondo, located in the South West, recorded a substantial 238% increase in road toll collection 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 increase in road tax revenue could also reflect increased enforcement or economic expansion in the state transport sector.

5. Zamfara State – 1.61 billion No

Zamfara, located in the North West, recorded one of the highest increases in road toll collection, increasing by 479% from N278.68 million in 2022 to N1.61 billion in 2023.

• Despite security challenges, this growth indicates significant progress in revenue collection.
• It also highlights a possible increase in economic activities, particularly from mining operations, freight transport or stricter enforcement policies.

4. Ogun State – N1.64 billion

Ogun, located in the South-West and famous for its industrial estates and proximity to the border with Lagos, reported a 10% drop in road tax revenue from N1.82 billion in 2022 to N1.64 billion in 2023 .

• This decrease may reflect a slowdown in industrial activities or changes 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, recorded a modest 5 percent growth in road toll collection, 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.
• The Delta’s road network supports the movement of goods and services, and its proximity to the coast plays a crucial role in generating 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 increase in road toll collections.

• State revenue increased 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 increase in tax receipts.

1. Lagos State – NI 16.74 billion

Lagos, Nigeria’s economic hub and West Africa’s commercial hub, topped the list with an impressive road tax revenue of N16.74 billion for 2023.

• Although comparable data for 2022 was not available, this figure highlights Lagos’ reliance on its extensive transport network and vibrant economy.
• The state’s roads support a high volume of commercial activity, with vehicles ranging from personal cars to commercial trucks contributing to its tax revenue.
• The significant collection highlights Lagos’ status as Nigeria’s largest economy.

---

Follow us for Breaking News and Market Intelligence.