BusinessDay

FG to get 45.17% in new revenue formula, states, 29.79, LGs, 21.04

…Buhari gets report, to seek NASS’ approval

The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), on Thursday, submitted a new revenue formula to President Muhammadu Buhari, with 45.17 percent proposed for the Federal Government, 29.79 percent for states, and 21.04 percent for local governments.

The extant revenue formula indicates a vertical revenue allocation formula of 52.68 percent for the Federal Government; 26.72 percent for states; 20.60 percent for the local governments, and 13 percent for derivation.

The proposed new formula, therefore, translates to a 3.33 percent reduction for the Federal Government, an increase of 3.07 percent for states, as well as an increase of .44 percent for the local governments.

President Buhari, while receiving the revenue report from Elias Mbam, chairman of the RMAFC, said he would await the final outcome of the constitutional review process before presenting the proposed revenue formula to the National Assembly as a bill for enactment.

Under Special Funds, the report recommended 1.0 percent for ecology, 0.5 percent for stabilisation, 1.3 percent for development of natural resources and 1.2 per cent for the Federal Capital Territory (FCT).

With regards to Special Funds, the report proposed an increase of .2 percent for the Federal Capital Territory (FCT) and a decrease of .38 percent for development of natural resources.

President Buhari, however, 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.

Read also: Buhari gets new revenue formula

‘‘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 said.

President Buhari listed some of the proposed amendments in the report as follows: ‘‘Establishing 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.’’

He assured members of the commission that the Federal Government would immediately subject the report to its internal review and approval processes, while awaiting the finalisation of the efforts by the National Assembly.

According to the President, this strategy, rather than issuing an executive modification order, as was done in 1992, is more in line with entrenching our democratic tenets.

He commended the RMAFC for a job painstakingly done, pledging his unwavering commitment and support to them in carrying out their constitutional mandates.

The President also thanked Nigerians, especially the state and local governments, for making their inputs through the broad stake-holder engagement processes that produced the report.

‘‘I am aware that the present revenue allocation formula has not been reviewed since the last exercise carried out in 1992.

‘‘Considering the changing dynamics of our political-economy, such as privatisation, deregulation, funding arrangement of primary education, primary health care and the growing clamour for decentralisation among others; it is necessary that we take another look at our revenue sharing formula, especially the vertical aspects that relate to the tiers of government.

‘‘This becomes more compelling as we need to reduce our infrastructural deficit, make more resources available for tackling insecurity, confront climate change and its associated global warming and make life more meaningful for our rapid growing population.’’

President Buhari said as an advocate for grassroots development, he has always remained committed to ensuring that all tiers of Government are treated fairly, equally and justly in the sharing of national resources.

‘‘I want to let you all know that I have keenly followed most of the discussions held in the geo-political consultative process and one thing that struck me clearly was the agreement that a review of our vertical revenue formula cannot and should not be an emotional or sentimental discussion and it cannot be done arbitrarily.

‘‘All over the world, revenue and resource allocation have always been a function of the level of responsibilities attached to the different components or tiers of government.

‘‘I am, therefore, happy to note that the discussions were held along these lines and rested squarely on roles and responsibilities as spelt out in the 1999 Constitution (as amended).

‘‘However, I also note that in reaching the final decisions at most of these engagements, not much emphasis was placed on the fact that the Second Schedule of the Nigerian Constitution contains 68 items on the exclusive legislative list and the remaining 30 items on the concurrent list requiring both the federal and state governments to address’’.

President Buhari, therefore, declared that for the nation 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.

‘‘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 percent and the states and local government share 50 percent and 35 percent respectively,’’ he said.

Boss Mustapha, secretary to the government of the federation, on his part, said the RMAFC followed due process in undertaking the exercise, and sought the opinion of the Federal Government before finalising the report.

Giving a synopsis of the report, Mustapha said that it was in four volumes, including a summary in the main report.

‘‘Volume 1 contains the various memoranda submitted by the Federal and State Governments as well as the FCT. Volume 2 details the presentation from the academia, civil society, professional bodies, traditional rulers, individuals, as well as women and youth council.

‘‘To complete the inclusiveness of the stakeholder participatory processes adopted, Volume 3 is a research that captures the body of knowledge that supported the review while Volume 4 is a further distillation of submissions by the state and local governments as well as NGOs and area councils of the FCT,’’ he said.

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