RMAFC TO BREAK REVENUE FORMULA JINX
Revenue Mobilization, Allocation and Fiscal Commission, RMAFC, yesterday, said it would review the subsisting revenue formula to ensure a fair and just distribution of the resources to all tiers of government.
The disclosure came as erstwhile Vice-President and Peoples Democratic Party, PDP, presidential aspirant Atiku Abubakar unfolded what he described as a shock therapy to reverse the recurrent proportion of government expenditure which he put at 80 per cent.
Under Atiku’s proposal to reverse what he said was an unsustainable burden of recurrent expenditure, the former vice president is promising to channel all receipts from oil and gas towards the development of infrastructure and education while at the same time limiting recurrent expenditure to government tax receipts.
New revenue formula
The newly inaugurated chairman of the RMAFC, Engr. Elias Mbam, gave the commission’s determination to produce a new revenue formula for the country against the background of intrigues that had in the last eight years hindered conclusion of work on a new revenue formula for the country.
Erstwhile President Olusegun Obasanjo and his successor, late President Umaru Musa Yar’Adua had submitted three proposals on new revenue formula for the country but had on each occasion withdrawn them.
Obasanjo withdrew one of the proposals on the allegation that there were fake copies of the bill in circulation.
The proposals by Obasanjo and the late Yar’Adua to the National Assembly were done in line with constitutional requirements requiring the President to lay exactly the report on a new revenue formula as articulated by the RMAFC to the National Assembly.
In the proposal presented by President Yar‘Adua to the National Assembly in 2008, 53.69 per cent of total earnings of the country was earmarked for the Federal Government, 31.10 percent for the states and 15.21 per cent for local governments.
The RMAFC had sought to use the proposal to replace the Executive Order proclaimed by former President Obasanjo in 2002 under which the Federal Government’s expenditure was pegged at 52.68 per cent; states 26.72 per cent; and local governments 20. 60 percent.
The executive order by Obasanjo followed the Supreme Court judgment proscribing the 7.5 percent provision for special funds from the federation account
Asserting its determination to produce a just and equitable revenue formula yesterday, Mbam said:
“We shall be more concerned on how to increase the size of the ‘national cake’ rather than dissipate all our energy on how to share a shrinking ‘cake.’”
RMAFC is empowered by the 1999 Constitution to, among others, review from time to time, the allocation formula and principles of operation to ensure conformity with changing realities; provided that any revenue formula which has been in force for a period of not less than five years from the date of commencement of the Act hence current revenue sharing formula has been in existence for more that the stipulated five years.
Huge recurrent expenditure
Atiku at a session with senior media professionals in Lagos on Sunday evening lamented the huge impact of recurrent expenditure on the development of the country even as he called for a review of the minimum wage structure among the States.
Proposing what he described as a shock therapy to reverse the proportion of 80 per cent spent on recurrent expenses, Atiku said: “Almost 80% of government income is spent on recurrent. This is what is used in paying salaries, allowances and all that. I want to reverse it. I want to propose to Nigerians that every money that is earned from petroleum resources we should use it to develop our country’s infrastructure and every money we make from the Federal Inland Revenue Service, from taxation to VAT and so on and so forth we should use it as recurrent.
“Unless you implement this shock therapy you will not develop this great country, we all have to make sacrifices because no amount…because at the rate we are going there is no amount. 80 per cent of your income is going into recurrent, so I was thinking one day, why cant we reverse it? All the money we earn from oil let us dedicate it to develop infrastructure, education, power and jobs and so on and so forth.”
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