Revenue sharing: FG proposes 3.13% increase in LG allocation

The federal government says it has proposed a 3.13 percent increase in revenue allocation to local governments.

By this proposal, the federal government’s allocation will reduce by 2.03 percent, while state governments will lose 1.1 percent in favour of the local governments.

Speaking at a town hall meeting on a new revenue formula organised by the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) on Tuesday in Abuja, Boss Mustapha, secretary to the government of the federation (SGF), said the proposal was to ensure increased development in the rural areas.

In the current sharing arrangement, the federal government (including special funds) get 52.68 percent, state governments get 26.72 percent, and local governments get 20.6 percent.

“As an interim and immediate measure, the federal government is, therefore, proposing the following: Federal Government 50.65%; State Governments 25.62%; Local Governments 23.73% and Derivation Allocation 13%,” Mustapha said.

Represented by Andrew David Adejoh, permanent secretary, political and economic affairs, Mustapha urged RMAFC to carry out the review taking into cognisance the dwindling national revenue base and the imperative for states to generate their internally generated revenue (IGR).

He said the new formula would be in line with the levels of responsibilities assigned to each tier of government, according to the 1999 constitution.

“All over the world, revenue and resource allocation have always been a function of the level of responsibilities attached to the different components or tiers of government. It is therefore important that this Current exercise rests squarely on the 1999 Constitution (as amended),” Mustapha added.

“It is, thus, very clear that for us to have an endearing vertical review of the present revenue allocation formula, we must first agree on the responsibilities to be carried out by all the tiers of government.”

The SGF added that the federal government took its position on the revenue sharing formula to increase the visibility of sub-national level responsibilities in addressing health and insecurity issues.

In August, Elias Mbam, RMAFC chairman, said a revised revenue allocation formula would be presented to President Muhammadu Buhari by the end of 2021.