The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) Tuesday said it has kick started the process of reviewing the revenue sharing formula among the three tiers of government.
Making this known in Abuja, the Chairman of the commission, Elias Mbam, who briefed the media, said, “Specifically, part 1, paragraph 32(b) of the third schedule to 1999 constitution (as amended), empowers the Commission to review from time to time, the revenue allocation formulae and principles in operation to ensure conformity with changing realities, provided that any formula which has been accepted by an act of the National Assembly shall remain in force for a period of not less than five years from the date of commencement of the Act’
“Pursuant to the above, and the need to review the allocation formula, the Commission has commenced the process of the review. The review is focused on the vertical allocation of the revenue allocation formula. The vertical formula deals with formula for the Allocation to Federal, states and Local Governments.
“The consideration for the review exercise is informed by the following;
i The last general review of the Revenue Allocation Formula was carried out over twenty – eight years ago (1992).
ii. The Political structure of the country has since changed with the creation of six additional States in 1996, which brought the number of states to 36. Correspondingly, the number of Local Governments also increased from 589 to 774.
iii. There have been some considerable changes arising from the policy reforms that altered the relative share of responsibilities of the various tiers of Government including the, controversies over funding of Primary education, Primary health care . etc.
iv. Inadequate/decaying infrastructure and heightened widespread internal security challenges across the country.
v. Ecological challenges like global warming, desertification, flooding and population explosion
vi. Inability of the current vertical Formula to adequately address the apparent mismatch between statutorily assigned functions and tax powers of each of the three levels of government and
vii. Agitation for a review by various interest groups including States and Local Governments.”
According to him, in view of the above the Commission has commenced the review of the current vertical revenue sharing arrangement with a view to producing a fair, just, and equitable revenue sharing formula that will be acceptable to majority of Nigerians.
“The current sharing arrangement is as follows;
Federal Government (Including Special Funds) – 52.68%
State Governments – 26.72%
Local governments – 20.60%
Total – 100%.”
The federal Government share of 52.68% is distributed as follows:
(i) Federal Governments Consolidated Revenue Fund (CRF) -48.50%
(ii) Federal Capital Territory (FCT) 1.00%
(III) Development of Natural Resources 1.68%
(iv) Ecological Fund 1.00%
(vi) Stabilisation Fund 0.50%
