Buhari approves 3.33% reduction for FG in revenue allocation formula

Written by on April 8, 2022

The Federal Government will have its share of revenue allocation reduced by 3.33 per cent if the new revenue-sharing formula proposed by the Revenue Mobilisation, Allocation and Fiscal Commission (RMAFC) gets approval.

In the proposal, the Federal Government will take 45.17 per cent; the states, 29.79 per cent and the local government councils, 21.04 per cent.

While the Federal Government will shed 3.33 per cent, states and local governments have their share increased by 3.07 per cent and 4.4 per cent respectively.

Under the current sharing arrangement, the Federal Government takes 52.68 per cent of the revenue share, states get 26.72 per cent, while local governments get 20.6 per cent.

The development is coming on the heels of the review of the current revenue sharing formula by RMAFC, which commenced last June. The Commission had embarked on a nationwide consultation on the need to repeal the formula, which predated the last created states.

Receiving the report at the State House, Abuja, yesterday, President Muhammadu Buhari said he would await the outcome of the constitutional review before presenting the report to the National Assembly.

The President, in a statement by his spokesperson, Femi Adesina, said: ‘‘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 outcome of the constitutional review process, especially as some of the proposed amendments would have a bearing on the recommendations contained herein.”

Speaking further, Buhari outlined some of the recommendations in the report.

“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.”

The President assured members of the Commission that the government would immediately subject the report to its internal review and approval process while awaiting finalisation of efforts by the National Assembly.

According to the president, the decision against issuing an executive modification order as was done in 1992, is in line with democratic tenets.

“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 rapidly growing population,” the President said.

According to him, equitable distribution has always been observed 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 geopolitical 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,” Buhari said.

‘‘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 Sixty Eight (68) items on the Exclusive Legislative List and the remaining Thirty (30) items on the Concurrent List requiring both the Federal and State Government to address.”

Buhari, therefore, said 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.

He noted that the proposal seeks a 3.33 percent reduction in the current federal government allocation and on the other hand an increase of 3.07 percent and 4.4 percent for the states and local governments.

He added that with regards to special funds, the report by the RMAFC proposed an increase of two per cent for the federal capital territory (FCT) and a decrease of 38 percent for the development of natural resources.

The president said the FG also made its inputs into the process of reviewing the vertical revenue allocation formula.

According to him, this was based on existing constitutional provisions for roles and responsibilities for the different tiers of government.

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