States Insist on Restructuring of Revenue Formula
- By Simeon Ogoegbulem
- Published May 16th, 2011
- News
- Unrated
STATE governments have again demanded a complete overhaul of the revenue-sharing formula which the 36 state governments described as archaic and a creation of the military. Speaking shortly after the monthly Federation Accounts Allocation Committee (Faac) meeting in Abuja, Malam Rabo Usman, chairman of finance commissioners’ forum, said it is unfair for the federal government to take 52.68 per cent of the nation’s revenue while the state governments take 26.72 per cent of the revenue.
Usman said the states have continued to argue that there is no basis for the continued retention of the current revenue sharing formula adding that the personnel cost of the states put together far outweigh that of the federal government.
“Our position is clear. We even made a submission through our governors that there is the need for us to change this archaic revenue-sharing formula. What we are using now is a creation of the military regime, with little modifications. I continue to say that it is very unfair to the states and local governments that up-to-date we are still making use of this formula. It is unfair.
“Put the personnel cost of states and local governments together and compare to the personnel cost of the federal government. Definitely, you will agree with me that even without any calculation, states’ cost will be higher than what the federal government is spending on personnel. Is it fair? So, we are saying that it is not fair at all. It needs a complete overhaul. Not just amendments here and there. A complete overhaul.” he further fumed.
Usman disclosed that the Nigerian National Petroleum Corporation (NNPC) has for the first time owed up its indebtedness to the federation to the tune of N450 billion adding that the corporation is making efforts to pay.
Giving the breakdown of the distribution, Hajiya Yabawa Wabi, minister of state for finance, said the total amount that was distributed was N455.596 billion and that statutory revenue was N309.944 billion while Value Added Tax (VAT) was N42.564 billion and the augmentation figure was N103.018 billion.
From this amount, federal government got N147.681 billion while states shared N74.806 billion and local governments took home N57.749 billion.
Also, she said, derivative states shared N29. 608 billion whereas out of the Value Added Tax (VAT) figure of N42.564 billion, federal government got N6.385 billion, states got N21.282 billion while local governments had N14.897 billion.
Usman said the states have continued to argue that there is no basis for the continued retention of the current revenue sharing formula adding that the personnel cost of the states put together far outweigh that of the federal government.
“Our position is clear. We even made a submission through our governors that there is the need for us to change this archaic revenue-sharing formula. What we are using now is a creation of the military regime, with little modifications. I continue to say that it is very unfair to the states and local governments that up-to-date we are still making use of this formula. It is unfair.
“Put the personnel cost of states and local governments together and compare to the personnel cost of the federal government. Definitely, you will agree with me that even without any calculation, states’ cost will be higher than what the federal government is spending on personnel. Is it fair? So, we are saying that it is not fair at all. It needs a complete overhaul. Not just amendments here and there. A complete overhaul.” he further fumed.
Usman disclosed that the Nigerian National Petroleum Corporation (NNPC) has for the first time owed up its indebtedness to the federation to the tune of N450 billion adding that the corporation is making efforts to pay.
Giving the breakdown of the distribution, Hajiya Yabawa Wabi, minister of state for finance, said the total amount that was distributed was N455.596 billion and that statutory revenue was N309.944 billion while Value Added Tax (VAT) was N42.564 billion and the augmentation figure was N103.018 billion.
From this amount, federal government got N147.681 billion while states shared N74.806 billion and local governments took home N57.749 billion.
Also, she said, derivative states shared N29. 608 billion whereas out of the Value Added Tax (VAT) figure of N42.564 billion, federal government got N6.385 billion, states got N21.282 billion while local governments had N14.897 billion.
