New revenue allocation formula underway ― RMAFC boss

The Revenue Mobilisation and Fiscal Commission has said that the process of providing a new revenue formula for the country is underway that will take care of agitation for a review by various interest groups including states and Local Governments.

Chairman of the Commission, Engr Elias Mbam made this known on Friday in Abuja while briefing the Secretary to the Goverment of the Federation, Mr Boss Mustapha on the ongoing process for the review of the Revenue Allocation Formula being carried out by the Commission and to obtain inputs and advise of the Federal Government.

Mbam said the current vertical Formula is unable to adequately address the apparent mismatch between statutorily assigned functions and tax powers of each of the three levels of government

He added that the last general review of the Revenue Allocation Formula was carried out over twenty -nine years ago (1992) and that 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.

According to him, the current revenue sharing formula is as follows: “Federal Government (including Special Funds) – 52.68%, State Governments, 26.72%; Local governments, 20.60%, total 100%.

“It should be noted that the Federal Government share of 52.68% is distributed as follows: Federal Government’s Consolidated Revenue Fund (CRF), 48.50%; Federal Capital Territory (FCT), 1.00%; Development of Natural Resources, 1.68%; Ecological Fund, 1.00%; Stabilization Fund, 0.50%,” he stated.

He disclosed that the 1999 Constitution of the Federal Government of Nigeria (as amended) empowers the Commission to periodically review the revenue allocation formulae and principles in operation to ensure conformity with changing realities. Specifically, Paragraph 32 (b), Part 1 of the Third Schedule to the 1999 Constitution mandates 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 Revenue Formula which had 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”.

Mbam, however, said efforts to review allocation formula in the past had suffered setbacks noting that the meeting with SGF was critical to the success of the review process.

Boss Mustapha who was represented by the Permanent Secretary, Ecological Project Office, Dr Habiba Lawal, said affirmed the commitment to the review process and that the views of the Federal Government would be presented at Public Hearing scheduled for Tuesday,  November 9, 2021, in Abuja.

He said the review of revenue was long overdue but that the constitutional reform remains cardinal to the success of any new revenue allocation formula “because it is within the constitutional reform, that the functions of the different types of government can be clearly stated, and then the responsibility for where the funds should go, will then be able to tie both at the sub-national levels”.

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