Buhari To Get New Revenue Allocation Formula In December- RMAFC

The Revenue Mobilization Allocation and Fiscal Commission has said that the country’s new revenue allocation formula will be presented to President Muhammadu Buhari by the end of this year.

It said the formula which is being reviewed is targeted at equitable distribution of the accrued revenue into the Federation account to the three tiers of government and this will be concluded before the end of 2021.

The Chairman Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) Engr. Elias Mbam disclosed these on Tuesday in Abuja during a chat with Journalists.

The federation account is currently being managed on a legal framework that allows funds to be shared under three major components-statutory allocation, Value Added Tax distribution; and allocation made under the derivation principle.

Under statutory allocation, the Federal Government gets 52.68 per cent of the revenue shared; states, 26.72 per cent; and local governments 20.60 per cent.

The framework also provides that Value Added Tax revenue be shared thus: FG, 15 per cent; states, 50 per cent; and LGs, 35 per cent.

Similarly, extra allocation is given to the nine oil producing states based on the 13 per cent derivation principle.

Mbam stated that the current formula being used by the three tiers of governnment was done 28 years ago adding that it had become imperative to review it for various reasons.

He gave some of these reasons to include changes in policy reforms, population explosion, inadequate infrastructure, agitation for review by stakeholders and heightened insecurity.

Mbam said that the review being done by the Commission will give the country a formula that is equitable, just and fair to the three tiers of government.

He said, “The Commission has commenced the process of the review. The review is focused on the vertical allocation of the revenue allocation formula. The vertical formula deals with formula for the Allocation to Federal, states and Local Governments.

“The consideration for the review exercise is informed by the last general review of the Revenue Allocation Formula was carried out over twenty – eight years ago (1992).

“The Political structure of the country has since changed with the creation of six additional States in 1996, which brought the number of states to 36. Correspondingly, the number of Local Governments also increased from 589 to 774.

“There have been some considerable changes arising from the policy reforms that altered the relative share of responsibilities of the various tiers of Government including the, controversies over funding of Primary education, Primary health care.

“Inadequate/decaying infrastructure and heightened widespread internal security challenges across the country.”

Mbam also said ecological challenges like global warming, desertification, flooding and population explosion as well as inability of the current vertical formula to adequately address the apparent mismatch between statutorily assigned functions and tax powers of each of the three levels of government.