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Nigeria may get new revenue sharing formula by end of 2021 ~ RMAFC

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The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has commenced the process of reviewing the existing Revenue Allocation Formula (RAF) among the federal, state and local governments.

According to the commission chairman, Elias Mbam, the new formula will be ready before the end of 2021 and would be submitted to President Muhammadu for onward transmission to the National Assembly.

In the current sharing arrangement, the federal government (Including special funds) is entitled to 52.68 percent while state governments receive 26.72 percents as well as local governments which receive 20.60 percent.

Mbam said the review will focus on the vertical allocation of the revenue allocation formula – to the federal, state and local governments.

At a media briefing in Abuja, the RMAFC chairman said that the consideration for the review exercise was informed by the fact that the last general review of the formula was carried out 28 years ago in 1992.

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He also said that the political structure of the country had since changed with the creation of six additional states in 1996, bringing the number of states to 36 while the number of local governments also increased from 589 to 774.

He added that there had been considerable changes arising from policy reforms that altered the relative share of responsibilities of the various spheres of government including controversies over the funding of primary education, primary health centers among others.

Mbam said the review was also necessitated by the inadequate and decaying infrastructure which had heightened widespread internal security challenges across the country.

He said ecological challenges like global warming, desertification, flooding and population explosion as well as the 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 informed the decision to embark on a fresh exercise.

Furthermore, he pointed out that the agitation for a review by various interest groups including states and local governments were also considered.

”In view of the above the commission has commenced the review of the current vertical revenue sharing arrangement with a view to producing a fair, just, and equitable revenue sharing formula that will be acceptable to majority of Nigerians.”

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