This initiative, which also involves leveraging digital solutions, aims to increase the state’s internally generated revenue (IGR) to N5 trillion under Governor Babajide Sanwo-Olu’s administration.

The government is set to introduce a Resident Global Digital Citizen Tax Management System, targeting not just local remote workers but also foreign firms and digital influencers operating within the state. 

This system will include the accreditation and licensing of digital economy operators, supported by an e-Portal, a Marketplace, and a Recovery Platform. The budget for this digital taxation initiative is estimated at N250 million.

Scheduled for September 25-26, 2024, the EKO Revenue Plus Summit will explore strategies to unlock new revenue streams for Lagos State. The summit, themed “Unlocking New Revenue Streams for Lagos State,” will focus on technology-driven methods to broaden the tax base and reach the ambitious N5 trillion IGR goal.

The digital economy sector alone aims to contribute N200 billion annually, drawing from about two million residents. The state has identified four core sectors for additional revenue generation: the Property Industry, expected to generate N1.5 trillion; the Digital Economy, projected to add N750 billion; the Informal Sector, anticipated to bring in N460 billion; and the Circular Economy, expected to contribute N20 billion.

To achieve these targets, Lagos State plans to use technology to enhance tax administration and explore new revenue avenues. The state aims to lay a strong financial foundation through innovative strategies and optimisation of current processes.

In addition to these, the Lagos State government is considering implementing a N500 entertainment tax, which could generate up to N20 billion annually. This proposal will be a key discussion point at the upcoming summit, as the government explores multiple avenues to bolster its fiscal capacity.

Beyond the entertainment tax, the government is exploring several initiatives, including a Content Aggregation Platform and Gateway, a Digital Schools Project, a BPO and Open TechHub Project, and Smart City Infrastructure and Services.

These projects aim to capitalise on digital advancements and the growing demand for tech-driven solutions in education and entertainment.

For instance, the Digital Schools Project is expected to provide quality education to 20,000 students, each paying N50,000 per semester, thereby generating N1 billion annually. 

Collaborations with tech giants like Microsoft, Huawei, and Google are also in the works, alongside investment partnerships with firms like Partech Africa and Chevron Nigeria.

This projection, coupled with a total Federal transfer of N596.629 billion, will contribute to the financing of the N2.246 trillion budget. The announced figure is a notable 17.35% increase from the N1.066 trillion targeted in the 2023 budget.

During the Lagos 2024 budget presentation at the House of Assembly on December 13, Governor Sanwo-Olu outlined the allocation of funds, with N1.224 trillion (54% of the budget) earmarked for capital expenditure and N1.021 trillion (46% of the budget) allocated for recurrent expenditure.

Lagos State has maintained its position as the top contributor to internally generated revenue in Nigeria for over two decades. In the first half of 2023, the state reported an IGR of approximately N400 billion, and in 2022, the National Bureau of Statistics highlighted that Lagos generated N651.15 billion, significantly surpassing other states, with Rivers State ranking second at N172.82 billion in IGR.

The considerable increase in the projected IGR for the upcoming fiscal year is likely attributed to an enhanced tax drive, aligning with the strategic goals of both the state and federal governments to bolster tax collection efforts.

Noteworthy is the 117.56% growth in the targeted total Federal transfer compared to the 2023 budget. With Value Added Tax (VAT) forming a substantial portion of the anticipated Federal transfer, it is anticipated that there will be intensified efforts to boost VAT collection in the coming year.

Recent initiatives by the Lagos State Internal Revenue Service (LIRS) include the introduction of the Eco Fiscal System — an automated invoicing solution aimed at enhancing revenue collection efficiency across the state. 

Looking ahead to 2024, the LIRS is expected to focus on robust efforts to collect the 5% consumption tax imposed on consumables and personal services in Lagos State. These measures collectively point to the state’s goal towards financial sustainability and effective revenue mobilisation.