Wike calls for increased revenue allocation to states

Written by on October 7, 2021

Rivers State Governor Nyesom Wike has urged the Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) to reduce revenue accruable to the Federal Government from the Federation Account to 40 per cent, and increase those of states and local government councils to 40 and 20 per cent, respectively.

The governor spoke through his deputy, Dr (Mrs ) Ipalibo Banigo, while delivering a keynote address at the public hearing on the review of revenue allocation formula for South-South zone, organised by RMAFC, held in Port Harcourt, yesterday.

Governor Wike described as unacceptable the current revenue sharing formula that allows the Federal Government to take 52.68 per cent, and the states and local government councils to take 26.72 per cent and 20.60 per cent, respectively.

The governor had earlier made the assertion when members of the Commission led by its Chairman, Elisa N Mbam, paid him a courtesy call at the Government House, Port Harcourt.

The governor observed that despite the changes that the country had been through in the past 29 years, it was regrettable that it has continued to use the 1992 revenue formula prescribed by the military.

Governor Wike faulted the use of 1992 population figure, public school enrolment and public hospital bed spaces, landmass as a formula for allocation of revenue.

He argued that a more equitable formula should also take into cognisance current population figure as well enrolment in private schools and the number of bed spaces in private hospitals.

‘Using the same formula of 1992 as a basis for revenue allocation in this country is so unfortunate. And to worsen the situation under a democratic dispensation, since 1999 till now, our country has not reviewed the revenue allocation formula,’ he stated.

Governor Wike urged the Commission to reduce the revenue accruable to the Federal Government to 40 per cent, saying it has abdicated its responsibility of providing security and basic infrastructure to the federating states.

‘You people should reduce the percentage of the Federal Government. Give them 40 per cent. Give the states 40 per cent, give local government 20 per cent. In that way, most of the responsibilities that belong to the Federal Government will now be taken away and given to the states.”

He noted that the current centralised federal system in operation in Nigeria has made it impossible for most states to look inwards and harness their potentials.

According to him, the country’s vast resources will continue to amount to nothing if the states are not allowed to use their resources to drive and determine their development.

‘We cannot talk about operating a federal system without having fiscal federalism. It is practically impossible. Let’s cancel that word federalism; we are operating a unitary system. But, you cannot be saying we are operating a federal system, at the same time operating a centralised system.’

The governor expressed reservation about the willingness of the present Federal Government to implement the recommendations of the revenue mobilisation and fiscal commission, which is currently holding a public hearing on a new revenue sharing formula across the six geopolitical zones.

RMAFC Chairman Mbam, meanwhile, explained that one of the major mandates of the commission is to review from time to time the revenue allocation formula to conform with changing realities.

Mbam explained that it has become necessary to review the current formula because the last review was done in 1992.

He observed that there has been a lot of changes in the political and socio-economic situation of the country.

According to him, the data that would be collated from the states will help the commission to arrive at a fair revenue formula.

‘We believe that what we will get from states will help us to come up with a revenue formula that will be fair, just and equitable.

‘Pursuant to the above provision, the Commission has embarked on the process of reviewing the existing Vertical Revenue Allocation Formula. Since the last review of the Revenue Allocation Formula in 1992, a lot of socio-economic and political changes have taken place. Therefore, the review has become necessary in order to reflect the changing realities,’ he explained.

He commended Governor Wike for accepting to host the zonal public hearing, saying that it was a demonstration of the governor’s commitment to inter-government collaboration and cooperation.

He appealed to the organised labour, the National Assembly, and Nigerians to make the public hearing a successful one.

Civil society organisations, in their submission, said the current contention between states and the Federal Government on who is constitutionally powered to collect Valued Added Tax (VAT) called for an upward review of revenue allocation.

SOURCE: THE SUN


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