The Federal Government has agreed to receive less revenue from the federation, with a proposal to collect 50.65 percent, down from the present level of 52.68 percent.
Boss Mustapha, the secretary to the Government of the Federation, SGF, gave the federal government’s position at the Town Hall organized on the New Revenue Formula, in Abuja, on Tuesday, November 9, 2021.
Allocations to state governments, according to the SGF, should also be reviewed downwards 25.62%, while Local Governments’ allocation should be increased to 23.73% and Derivation Allocation retained at 13%.
The present vertical Revenue Allocation Formula is: Federal Government 52.68%; State Governments 26.72%; Local Governments 20.60% and Derivation Formula 13%.
Mustapha who was represented by the Permanent Secretary, Political and Economic Affairs, Mr. Andrew Adejoh, said that the current administration would implement whatever formula was passed by the National Assembly.
He said, “On behalf of the President, Muhammadu Buhari, I wish to reassure all Nigerians that the Federal Government will implement the final outcome of the conclusion of this exercise as soon as the National Assembly enacts the relevant legislation to complete the process.”
The SGF, said, however, that 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 FG was spent on providing services that were the responsibilities of state governments.
According to him, “The FG 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.
“In order to appreciate the position of the FG, it is also necessary I share with us the vertical disbursement of the FG’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 Sub-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).
“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 FG 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 FG’s position on the review of the present vertical revenue allocation formula include FG’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 FG 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%.
Source: Vanguard
