Making the proposal in a speech at the town hall meeting on the review of Nigeria’s vertical revenue allocation formula in Abuja, Secretary to the Government of the Federation, Boss Mustapha said the proposal was to ensure increased development in the rural areas.
As it stands, the sharing formula is: FG 52.68 per cent; States 26.72 per cent; LGs 20.60 per cent, and Derivation 13 per cent.
Over the years, there has been clamour for a review of the revenue sharing formula as the present arrangement is skewed in favour of the federal government.
The last revenue review was carried out in 1992.
However, with issues such as heightened insecurity, decaying infrastructure and reduced foreign exchange earnings, analysts say there is no better time than now to review the revenue sharing formula.
Speaking at the event, the SGF, who was represented by Permanent Secretary, Political and Economic Affairs, Mr. Andrew David Adejoh, urged RMAFC to carry out the review taking into cognisance the dwindling national revenue base and the imperative for states to generate their IGR.
He said: “Like I said over there, federal government’s position is very clear. First and foremost, the vertical revenue sharing formula should follow the constitutionally laid down responsibilities and in doing that you recognised that 68 items and they are not small items are federal government responsibilities; 30 are only state and even within those 30, is concurrent.
“So, by the time you go through it you will discover that the federal government has need for even more resources than being clamoured for. However, the federal government recognises that the country is made up of constituent states where the development happening is amenable for a review and that is why we have done some review to make sure that we move from where we were at 52.68 to 50.6. Then for state government, we did a reduction of a per cent and increased that of local government because development needs to start getting to the local people if we, as a country, have to get the cutting edge of development.
“Alongside the above, other considerations that informed the federation government’s position on the review of the present vertical revenue allocation formula included federal government’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 Federal Government 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 %,” the SGF said.