THE Revenue Mobilization Allocation and Fiscal Commission has finally presented the report of the review of the vertical revenue allocation formula to the President, Major General Muhammadu Buhari, (retd.) after failing to meet the 2021 deadline.
Last year, the Chairman of the commission, Elias Mbam, said the report would be presented to the president by December 31, 2021. However, the commission failed to meet this deadline.
New formula proposes 45.17% for FG, 29.79% for states, 21.04% for LGAs
The Chairman of the commission announced on Thursday that the proposed vertical revenue allocation formula advised 45.17 per cent for the Federal Government, 29.79 per cent for state governments and 21.04 per cent for the local governments.
Under Special Funds, he said the report by the commission recommended 1.0 per cent for Ecology, 0.5 per cent for Stabilisation, 1.3 per cent for Development of Natural Resources, and 1.2 per cent for the FCT.
The old revenue formula was designed during the tenure of former President Olusegun Obasanjo.
Under this new formula, the Federal Government gets 52.68 per cent, the 36 states get 26.72 per cent while the 774 local government areas in the country share 20.60 per cent every month.
The proposed formula, therefore, suggested an upward review for states and local governments, but a downward review for the Federal Government.
In arriving at the new vertical revenue allocation formula, Mbam told the President the commission had consulted widely with major stakeholders, public hearings in all the geo-political zones, administered questionnaires and studied some other federations with similar fiscal arrangements like Nigeria to draw useful lessons from their experiences.
He added that literature reviews were conducted on revenue allocation formula in Nigeria dating back to pre-independence period while the commission received memoranda from the public sectors, individuals and private institutions across the country.
Explaining the major reasons for the exercise, Mbam noted that since the last review was conducted in 1992, 29 years ago, the political structure of the country had changed with the creation of six additional states in 1996, which brought the number of states to 36.
Correspondingly, he said, the number of local governments councils also increased from 589 to 774.
‘‘There have been considerable changes arising from the policy reforms that altered the relative share of responsibilities of the various tiers of Government such as deregulation, privatization and the lingering controversies over funding of primary education, primary healthcare,’’ he said.