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Worried by the
enormous financial pressure they are likely to be saddled with
following the recently approved National Minimum Wage for workers,
states and local governments in the country have renewed their demand
for the immediate review of the revenue allocation formula by the
National Assembly.

Chairman,
Commissioners of Finance Forum, Rebo Usman, said in Abuja that the
approval of a new revenue sharing formula for the country is long
overdue in the face of current socio-economic realities.

He said that the
speed with which the Federal Government and the National Assembly
adopted in passing the National Minimum Wage Bill should also be used
in handling the amendment to the vertical revenue sharing formula.

The Revenue
Mobilisation, Allocation and Fiscal Commission (RMAFC) recently said it
was planning a review of the revenue sharing formula indices,
considering that the basis for the one currently in use has already
been overtaken by reality, since it has been in operation from the
military regime.

Dividends of democracy

However, Mr. Usman,
who is also the Taraba State commissioner for finance, said the huge
responsibility the states and local governments are saddled with in
catering for the people at the grassroots has made it crucial that
something be done urgently to help them deliver democracy dividends to
their people.

“We have a
situation in this country where the federal government takes more than
50 per cent of the total revenue available for distribution to the
three tiers of government every month. Yet, the states and local
governments are under an obligation to still pay the recently approved
minimum wage to workers, because it has now become a law that is
binding on all stakeholders.

“It is common sense
that states and local governments put together spend more, because they
are closest to the grassroots where the bulk of the country’s
population reside. So, one cannot understand what justification the
Federal Government has in taking 50 per cent of the revenue every
month,” Mr. Usman said.

He said the
leadership at all levels of government has a huge responsibility to
resolve this issue, pointing out that though the states and local
governments have agreed to pay the new minimum wage, it would be
difficult to do so under the current revenue allocation, as they cannot
give what they do not have.

“These are issues
the states and local governments expect the NLC to bring to the fore
and demand for a redress. Since we have a source from where everyone
can draw to ensure that all workers in the country can be treated
fairly and equally, the appeal we will like to make to Nigerians,
particularly the leadership of this country, is to look into the source
of funding of these two tiers of government, which also have a
responsibility to deliver democracy dividends to their people,” he said.

On allegations that
states do not generate enough internal revenue, Mr. Usman said that
Internally Generated Revenue (IGR) is a function of economic activity,
which in turn is determined by the existence of infrastructure, like
power, which is supposed to be supplied by the Federal Government,
wondering how many states today have a robust economic activities that
could sustain revenue generation.

The first attempt
at reviewing the nation’s revenue sharing formula was initiated by the
commission in August 2001, when it proposed a formula that gave the
Federal Government 41.3 per cent, states (31 per cent), local
governments (16 per cent) and a total of 11.7 per cent for special
funds, consisting 1.2 per cent allocation to the FCT; one per cent each
to ecology and national reserve fund, agriculture/solid mineral fund,
and 1.5 per cent and Basic Education and Skill Acquisition (BESA), 7
per cent.

In January 2003, a
new draft formula gave the Federal Government 46.63 per cent share;
states, 33 per cent, and local governments, 20.37 per cent.

However, the
Obasanjo administration, in November 2003, unilaterally asked the
National Assembly to withdraw the proposed formula by the commission,
necessitating reliance on the old formula till the end of his
administration.