How Population Data Could Change the Debate on Regional VAT and Tax Contributions

The claim that the South-East contributes far less in VAT and company income tax should be assessed against more than disputed population estimates. Indicators such as NIN enrolment, voter registration, SME registration and active SIM cards can offer a clearer picture of each region’s population and economic weight. Using those measures, the South-East’s VAT and CIT contribution may be slightly above its population share when compared with most zones, except the South-West. The North-West, for example, appears to have more than twice the South-East’s tax output, but not the three times that its population size might suggest. A major issue is that much economic activity falls outside VAT, especially small businesses, agriculture and trading. Broadening tax compliance, improving PAYE collection and strengthening produce boards in agrarian states could help states raise more internally generated revenue and contribute more fairly to the federation.

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