RMAF to review revenue formula after 25 years

 The Chairman of Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mr Elias Mbam, on Tuesday, assured the three tiers of government will get a new revenue formula before the end of this year, the first review in 25 years.

Speaking in Abuja, to herald the commencement of the review of the subsisting revenue formula, Mbam, said that the last review of the revenue allocation was carried out in 1992.

According to him, 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 formula and principles in operations to ensure conformity with changing realities, provided that any such formula accepted by an Act of the National Assembly had remained in force for a period of not less than five years from the date of its commencement.

To this effect, he said, the current revenue would be focused on the vertical allocation of the revenue allocation formula which deals with allocation to federal, states and local governments.

The current review, Mbam, noted, is necessitated by the fact that the last review took place 28 years ago and the political structure of the country has since changed with the creation of six additional states in 1996, which brought the number of stages to 36. This, he also explained increased the number of local governments from 589 to 774.

Other reasons include, change 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 and primary health care; inadequate/decaying infrastructure and heightened widespread internal security challenges across the country; ecological challenges like global warming, desertification, flooding and population explosion. The reasons also include the 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 agitation for review by various interest groups including states and local governments.

However, the current sharing formula, according to the chairman, includes Federal Government, 52.68 per cent; state governments, 26.72 per cent and local governments, 20.60 per cent.

“The Federal Government’s share of 52.68 per cent is distributed as follows: Federal Governments Consolidated Revenue Fund (CRF), 48..50 per cent; Federal Capital Territory (FCT), 100 per cent; Development of Natural Resources, 1.68 per cent; Ecological Fund, 1.00 per cent and Stabilisation Fund, 0.50 per cent,” he said.