Federal Gov’t Begins Review Of Revenue Allocation Formula

The Federal Government has officially commenced the process of reviewing the nation’s revenue allocation formula to meet current realities.

Chairman of the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC), Mohammed Bello Shehu announced the commencement of the review process at a press conference at Yar’Adua Centre in Abuja on Monday.

There are indication that the new formula would give more funds to the states of the federation.

Sources in the commission disclosed that government was planning to increase total allocation to the states to between 30 and 40% from the current formula which allocates 52.68%, 26.72% and 20.60% to the Federal, State and Local Governments, respectively.

Stakeholders at the briefing urged the government to push more resources to the sub-national, especially for infrastructure projects, including provision of electricity.

The Federal Government is already relinquishing 5% of its tax revenue to the states as contained in the recently signed national tax laws.

The RMAFC chairman said the aim of the review was to produce a fair, just, and equitable revenue-sharing formula that reflects the current responsibilities, needs, and capacities of the three tiers of government — Federal, State, and Local Governments —in line with the constitutional roles.

Dr Shehu said the Commission will carefully assess the needs, service delivery obligations, fiscal performance, and developmental disparities.

“Let me state clearly that this review will be inclusive, data-driven, and transparent. It will involve broad-based consultations with critical stakeholders, including the presidency, national assembly, state governors, ALGON, the judiciary, MDAs, civil society organisations, traditional rulers, the organised private sector, and development partners,” he stated.

The last review of the Revenue Allocation Formula was carried out in 1992; however, there were several executive orders from May 2002 to date to modify the formula to reflect emerging socioeconmic realities.

The Commission restated its commitment to integrating cutting-edge research, empirical data, and international
practices in its analysis.