New revenue formula unlikely now –RMAFC

Posted by admin Latest Politics Tuesday, December 11th, 2012

The Revenue Mobilisation, Allocation and Fiscal Commission has said it has no plan to review the revenue formula in the nearest future.

The RMAFC spokesman, Mr. Ibrahim Mohammed, said the Commission could not come out with a new revenue sharing formula for the federal, states and the local government councils because of “inadequate funding”.

Mohammed said the Commission had made a request for funding of the process through the 2013 budget proposal. However, he could not confirm how much was required.

He named an item in the process that needed to be funded as zonal town hall meetings in each of the six geo-political zones of the country.

According to him, many organisations have already made inputs to the proposed formula but that wider consultations needed to be made.

State governors had used the platform of the Nigerian Governors’ Forum to clamour for a new revenue sharing formula to favour the states.

They had in January hinged their support for the removal of subsidy on petroleum products on the formulation of a new formula.

Also in 2011, while the debate on a new national minimum wage lasted, many state governors had hinged their capacities to pay the new wage on the review of the revenue sharing formula to favour the states.

Similarly, the House of Representatives had in November given the RMAFC a period of two weeks to present to the National Assembly a new revenue formula for its approval.

Revenue sharing formula refers to the proportion of resources accruing to the federation that goes to each of the three tiers of government.

It also defines the proportion of resources that must be retained in the territories where they are generated as well as what goes to the agencies of government that collect the revenues on behalf of the federation.

Currently, 13 per cent of mineral resources known as derivation goes to the oil producing states. Four per cent of the money collected by Nigerian Customs Service is given to the organisation as the cost of collection.

Similarly, the Federal Inland Revenue Services receives seven per cent of the money it collects to cater for the cost of collection.From the Value Added Tax, four per cent cost of collection is assigned to FIRS.

After these deductions – both mineral revenue and non-mineral revenue – are pulled together into the Federation Account and shared among the three tiers of government.

Under the subsisting formula, the Federal Government gets 52.68 per cent; the state governments get 26.72 per cent; and the Local Government Councils receive 20.6 per cent.

After this deduction, the net revenue is shared among the three tiers of government in the proportion of the Federal Government, 15 per cent; state governments, 50 per cent; and Local Government Councils, 35 per cent.

Via Punchwp_posts