BY VICTORIA ONU, ABUJA
The Revenue Mobilization Allocation and Fiscal Commission has said that the country’s new revenue allocation formula will be presented to President Muhammadu Buhari by the end of the year.
It added that the formula, being reviewed, was targeted at equitable distribution of the accrued revenue in the federation account to the three tiers of government before the end of 2021.
The Chairman, Revenue Mobilisation Allocation and Fiscal Commission, Elias Mbam, disclosed these, on Tuesday, in Abuja during an interview session with journalists.
The federation account is currently being managed on a legal framework that allows funds to be shared under three major components – statutory allocation, Value Added Tax distribution; and allocation made under the derivation principle.
Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments, 20.60 per cent.
The framework also provides that Value Added Tax revenue be shared at 15 per cent to the FG; states, 50 per cent; and local government councils, 35 per cent.
Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation principle.
Mbam said that the current formula being used by the three tiers of government was done 28 years ago, adding that it had become imperative to review it for various reasons.
He said that the reasons included changes in policy reforms, population explosion, inadequate infrastructure, agitation for review by stakeholders and heightened insecurity.
Mbam said that the review being done by the Commission would give equitable, just and fair share to the three tiers of government, stressing, “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 government councils.
“The consideration for the review exercise is informed by the last general review of the Revenue Allocation Formula carried out over 28 years ago (1992).
“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 government councils also increased from 589 to 774.
“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, inadequate/decaying infrastructure and heightened widespread internal security challenges across the country.”
