President Muhammadu Buhari has approved a 3.33% reduction in the Federal Government’s allocation in the current review of the revenue allocation formula.
This was disclosed by President Buhari after he received a report on the review of the vertical revenue allocation formula from members of the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) led by Engr. Elias Mbam at the State House, Abuja.
As part of the review, an increase of 3.07% and 0.44% for the States and Local Governments respectively is being recommended.
Read: Revenue Allocation: Review of sharing model needed to ensure conformity with changing realities – FG
What the President is saying
The President signalled he will wait for the final outcome of the constitutional review process before presenting the report to the National Assembly as a Bill for enactment.
President Buhari stated “Ordinarily, I would have gone ahead to table this report before the National Assembly as a Bill for enactment.
‘‘However, since the review of the vertical revenue allocation formula is a function of the roles and responsibilities of the different tiers of government, I will await the final outcome of the constitutional review process, especially as some of the proposed amendments would have a bearing on the recommendations contained herein.”
Buhari revealed that the recommendations in the report will amongst other things, “establish local government as a tier of government and the associated abrogation of the state/local government account; moving airports; fingerprints, identification and criminal records from the exclusive legislative list to the concurrent legislative list, empowering the RMAFC to enforce compliance with remittance of accruals into and disbursement of revenue from the Federation Account as well as streamlining the procedure for reviewing the revenue allocation formula.”
Read: North Central leaders propose 35% revenue allocation to states
President Buhari declared that for Nigeria to have a lasting review of the present revenue allocation formula, there must first be an agreement on the responsibilities to be carried out by all the tiers of government.
He noted that the proposal seeks a 3.33% reduction in the current Federal Government allocation and on the other hand, an increase of 3.07% and 0.44% for the States and Local Governments.
He added that with regards to the Special Funds, the report by the RMAFC proposed an increase of 0.2% for the Federal Capital Territory (FCT) and a decrease of .38% for the Development of Natural Resources.
The President recounted that the Federal Government also made its input into the process of reviewing the vertical revenue allocation formula based on existing constitutional provisions for roles and responsibilities for the different tiers of government.
‘‘We must note the increasing visibility in Sub-national level responsibilities due to weaknesses at that level, for example: Primary Health Care; Basic Primary Education; Levels of insecurity, and; Increased remittances to State and Local Governments through the Value Added Tax sharing formula, where the Federal Government has only 15% and the States and Local Government share 50% and 35% respectively,’’ he said.
What you should know
- Recall Nairametrics reported last year that the RMAFC had revealed that the revised revenue sharing formula will be ready for submission to the Federal Government by the end of 2021.
- The review is coming 28 years after the last one was done in 1992 following agitation by stakeholders that more revenue should be made available to the state and local governments.
- The current revenue-sharing arrangement has the federal government (including special funds) getting 52.68%, the state governments receive 26.72%, while the local governments get 20.6%.
- The proposed vertical revenue allocation formula advised 45.17% for the Federal Government, 29.79% for State Governments and 21.04% for the Local Governments
