Tax Reform Bills: Peace Advocate Calls For Productivity- based Revenue Sharing Formula

The executive director of Foundation for Peace Professionals (PeacePro), Mr. Abdulrazaq Hamzat, has called for the overhauling of Nigeria’s current revenue sharing formula.

He advocated for a revenue sharing formula that is based on productivity rather than population consideration.

Hamzat made the call in the wake of the ongoing tax reform bills, emphasising that this shift is crucial to driving sustainable economic growth, reducing regional disparities, and fostering accountability in governance across the country.

He noted that the tax reforms should be broad and all encompassing, rather than limited to peripheral changes that would not address the fundamentals of the Nigerian economy.

“For too long, Nigeria’s revenue sharing system has been skewed toward population size, rewarding states based largely on demographic figures rather than their actual contribution to the national economy.

“This system has created an unsustainable reliance on federal allocations and undermined the incentive for state governments to develop productive, self sustaining economies,” he said.
Hamzat pointed out that a productivity-based revenue-sharing model would directly link a state’s economic outputs and the revenue it receives, incentivizing local governments to prioritize infrastructure, industry, and job creation.

He posited that the current revenue sharing model has inadvertently favoured states with large populations, regardless of their economic activity, while those with greater productive potential remain underfunded.

“States with abundant natural resources, robust agricultural sectors, or strong industrial bases should be rewarded for their contributions to national revenue. On the other hand, states that have failed to diversify their economies or foster meaningful economic development should be motivated to do so in order to secure a fair share of the national revenue pool,” he added.