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FG proposes revenue increment, new sharing formula for LGAs

By Idowu Abdullahi

The Federal Government has disclosed that it was considering increasing revenue been allocated to Local Government Areas across the country with its new proposed revenue sharing formula, adding that the plan would ensure both the apex and state governments take cut in its take-home to give room for the increment.

Giving the proposed breakdown, the central government noted that while it would collect 50. 65 per cent, down from the present 52.68 per cent, state governments take-home would be reviewed downwards 25.62 %, while that of local governments would be increased to 23.73% and Derivation Allocation retained at 13 %.

The Secretary to the Government of the Federation (SGF), Boss Mustapha, announced the federal government position at the Town Hall organized on the New Revenue Formula, in Abuja, on Tuesday, noting that the President Muhammadu Buhari-led administration would stop at nothing in implementing the formula passed by the National Assembly.

Represented at the occasion by the Permanent Secretary, Political and Economic Affairs, Andrew Adejoh, Mustapha re-assured Nigerians that the apex government would implement the final outcome of the conclusion of the exercise as soon as the National Assembly enacts the relevant legislation to complete the process.

He said despite the government determination, the responsibilities shouldered by each tier of government should guide the Revenue Mobilisation Allocation and Fiscal Commission in the new formula. Mustapha said that a lot of the resources allocated to the federal government was spent on providing services that were the responsibilities of state governments.

“We all agreed, as Nigerians, that the present Revenue Allocation formula, both vertical and horizontal, is long over-due for a review not only because the last one was done in 1992 but most importantly, contemporary issues since then, such as heightened insecurity, decaying infrastructure, need for appropriately matching statutory functions and tax powers, need to be taken into consideration.

“The Federal Government has keenly followed all the geo-political Consultative process and it is important that we remind ourselves that review of revenue cannot and should not be an emotional or sentimental discussion and it cannot be done arbitrarily. All over the world, revenue and resource allocation has always being a function of the level of responsibilities attached to the different components or tiers of government. It is therefore important that this Current exercise rests squarely on the 1999 Constitution (as Amended).

“The Second Schedule of the Nigerian constitution contains Sixty (68) Items on the Exclusive Legislative List, and these are areas in which the Federal Government is supposed to use resources accruing to the federation to provide services and related development needs. On the other hand, the Thirty (30) items on the Concurrent requires both the Federal and State Government to address. It is, thus, very clear that for us to have an endearing vertical review of the present revenue allocation formula, we must first agree on the responsibilities to be carried out by all the tiers of Government.

“In order to appreciate the position of the Federal Government, it is also necessary I share with us the vertical disbursement of the Federal Government’s share of 52.68%, which is as follows: Disbursement of the FGN Share of 52.68%; Consolidated Revenue Fund (CRF)48.50%; Federal Capital Territory (Like a State)1.00%; Natural Resources Development Fund (States are the beneficiaries)1.68%; Ecological Funds 1.00% (45% to NEMA, NEDC, NALDA and NAGGW, 55% addressing ecological challenges at Sun-National levels); Stabilisation Account 0.50% (25 % – 0.125 to NSIA and 75% 0.375 managed by OAGF and mostly utilized for emergency requests by States),” he said.

Continuing, Mustapha added, “similarly, within the Consolidated Revenue Fund, disbursements are made for Debt Servicing, Statutory Transfers, Salaries, Pension and Gratuities, capital supplementation amongst others. It is, therefore, clear from the above that the Federal Government spends most of its resources on and for the state and local government levels. When you juxtapose this with the equally greater number or responsibilities on the Exclusive Legislative List, you would even want to make a case for greater allocation to the Federal Government.

“However, the Federal Government has taken cognizance of the growing clamour for a review of the present vertical revenue allocation formula, President Muhammadu Buhari’s commitment to ensuring resources for development get to the poorest of the poor in our rural communities, imperative to incorporate local communities in our security architecture as well enhancing equitable and inclusive national development.

“Alongside the above, other considerations that informed the Federation Government’s position on the review of the present vertical revenue allocation formula included Federal Government’s increasing visibility in Sub-national level responsibilities due to weaknesses at that level e.g Primary health care, basic primary education; Increasing level of insecurity and increased remittances to State and Local Governments through the Value Added Tax sharing formula, where the Federal Government has only 15 % and the States and Local Government share 50% and 35% respectively.

“As an interim and immediate measure, the Federal Government, is therefore, proposing the following: Federal Government 50.65%; State Government 25.62 %; Local Government 23.73% and Derivation Allocation 13 %. It is important to restate that revenue allocation should be done constructively in the face of a dwindling national revenue base and the imperative for states to generate their IGR. Equally important is the fact that this review should culminate in improved national development.”

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