Top 10 states where Nigerians pay the most road taxes in 2023

On October 31, 2024By Karl

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.

Highway taxes are daily taxes levied primarily on commercial transportation operators that reflect the extent of road use, economic activity, and effectiveness of tax enforcement in each state.

This source of income plays a vital role in financing interregional road maintenance, transport infrastructure and public services.

A report by the National Bureau of Statistics (NBS) notes a significant overall increase in IGR across Nigerian states, with road taxes contributing significantly to this growth.

In 2023, 36 states and the Federal Capital Territory (FCT) collectively generated N2.43 trillion; This represents a 26% increase from N1.93 trillion in 2022.

Lagos, Rivers and FCT emerged as the top contributors to the IGR, demonstrating their strategic economic importance.

Nigerian states collected a total of about N80.28 billion in road taxes in 2023; This reflects the significant increase of N49.14 billion collected in 2022.

This represents 63.4% growth from the previous year and underscores tax enforcement efforts, increased economic activity or expanded transportation infrastructure in many states.

The large differences in road tax revenues across states reflect regional disparities in economic activity, from industrial hubs such as Lagos and Ogun to agricultural states such as Ebonyi and Zamfara.

Additionally, the imposition of transportation taxes serves as a measure of a state’s ability to benefit from commercial transportation operations.

While states such as Ebonyi, Zamfara and Cross River have shown significant 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

Rivers State, located in the South-South region and home to Port Harcourt, a hub for oil and gas activities, did not report any road tax revenue in 2022.

However, it collected N830 million in taxes in 2023, 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 is likely to have contributed to this sudden increase.
Rivers, one of Nigeria’s oil-producing states, benefits from heavy road use, especially trucks used to transport oil.

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 through northern Nigeria.
The modest increase indicates stable economic activity despite the economic challenges faced across the country.
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, located in the South-South and known for tourism, agriculture and the annual Calabar Carnival, has recorded an astronomical increase in road tax revenue; increased from N137.84 million in 2022 to N1.22 billion in 2023; Over 780%.

This significant increase likely indicates improved tax enforcement mechanisms or expanded economic activity.
The state’s tourism and agriculture sectors may have contributed to the increase in tax revenue by leading to greater road use.

7. Edo State – N1.59 billion

Edo, another South-South state, experienced a significant 66% increase in road tax collections; It increased from N960.59 million in 2022 to N1.59 billion in 2023.

Known for its strategic location on major transport routes connecting southern Nigeria to the north, this increase reflects the intensification of road taxes or increased compliance by transport operators.
Edo’s trade and transportation-based economy likely saw more road activity, which increased tax collections.

6. Ondo State – N1.59 billion

Ondo in the south-west recorded a significant 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, which attract significant industrial and agricultural transport activities.
The increase in road tax revenue may also reflect increased enforcement or economic expansion in the state’s transportation sector.

5. Zamfara State – N1.61 billion

Zamfara, located in the north-west, saw one of the largest increases in road tax collections, increasing by 479% from N278.68 million in 2022 to N1.61 billion in 2023.

Despite the security problems encountered, this growth shows that significant progress has been made in revenue collection.
It also highlights the possible increase in economic activity, particularly from mining activities, transportation of goods or stricter enforcement policies.

4. Ogun State – N1.64 billion

Ogun, located in the southwest and known for its industrial zones and border proximity to Lagos, reported a 10% decline in road tax revenue, falling from N1.82 billion in 2022 to N1.64 billion in 2023.

This decline may reflect a slowdown in industrial activity or changes in tax collection strategies.
Despite the decline, Ogun continues to be a significant contributor to IGR due to its strategic location as a transit state for goods to and from Lagos.

3. Delta State – N2.60 billion

Delta, a South-South and major 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.

Steady growth reflects stable economic activity, especially in oil logistics and transportation.
The Delta’s road network supports the movement of goods and services, and its proximity to the coast plays an important role in increasing tax revenues.

2. Ebonyi State – N2.85 billion

Ebonyi, located in the south-east and known for its agricultural prowess, particularly rice production, reported the most significant percentage increase in road tax collections.

The state’s revenue increased by 540% from N445.24 million in 2022 to N2.85 billion in 2023.
This notable increase may be due to stronger enforcement, increased transportation activity, or improved collection efficiency.
Ebonyi’s growing transport sector and expanding economy have likely contributed to the increase in tax collections.

1. Lagos State – N16.74 billion

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

Although no comparable data is available for 2022, this figure underscores Lagos’ confidence in its extensive transportation network and vibrant economy.
The state’s roads support high volumes of commercial activity, where vehicles ranging from personal cars to commercial trucks contribute to tax revenue.
The significant collection highlights Lagos’ status as Nigeria’s largest economy.