Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Dr. Elias Mbam, has said that a new revenue-sharing formula is required to address emerging challenges threatening the country. Mbam stated this during an interaction with the Nigerian Guild of Editors (NGE) at the weekend. He said the current revenue template has not been reviewed in the past 28 years.
Part 1, paragraph 32 (b) of the third schedule of the 1999 Constitution (as amended) empowers the Commission to review periodically the country’s sharing formulae and principles in line with changing political and economic realities. Since 1992, when the last review was made, six additional states have been created, thus overstretching the states’ share from the federation account. The number of local government councils also increased from 589 to 774.
The RMAFC boss said the creation of additional political entities is one of the compelling reasons for the planned review of the vertical allocation formula. The vertical formula provides a template for the allocation of common resources among the federating units. “There have been some considerable changes arising from the policy reforms that altered the relative share of responsibilities of various tiers of government, including the controversies over funding of primary education primary healthcare; inadequate/decaying infrastructure and widespread internal security challenges across the country,” he said.
He pointed out the glaring inability of the vertical formula to “adequately address the apparent mismatch between statutorily assigned functions and tax powers of each of the three levels of government,” noting that there have been agitations from different interest groups for a review.
The Commission had made several attempts at reviewing the template but the processes were truncated. For instance, a judgment of the Supreme Court on April 5, 2002, recognising federal, state, and local governments as beneficiaries of the federation account ended the 2001 recommendation. In 2003 and 2014, similar efforts were made but recommendations were now followed through. That leaves the country with what is generally considered as a document unfit for purpose.
The Commission is currently on a nationwide sensitisation to prepare critical stakeholders for a review of the revenue sharing template to align with the current stage of the country’s development. The head of the Commission said the review would be completed this year to give the country an equitable revenue sharing formula.