FAAC Begins Talks on Review of Revenue Formula

FAAC Begins Talks on Review of Revenue Formula

  • FG, states, LGs share N701bn for April

The Federation Accounts Allocation Committee (FAAC) has begun talks with stakeholders on the review of the current revenue allocation formula between the federal, state and local governments.

Under the current sharing formula, the federal government takes the lion’s share of 52.68 per cent from the Federation Account.

States 26.72 per cent, while the balance of 20.60 per cent is given to the 774 local governments in the country, while 13 per cent is allocated to the oil- producing states based on derivation principle.

For Value Added Tax (VAT) revenue, the federal government gets 15 per cent, states 50 per cent, while local governments get 35 per cent.

The Chairman, FAAC Commissioners’ of Finance Forum, Mahmoud Yunusa, confirmed the commencement of discussions on the impending review at a press briefing in Abuja, wednesday after the committee’s meeting.

The Permanent Secretary, Ministry of Finance, Mahmoud Dutse, and the Accountant-General of the Federation Alhaji Ahmed Idris, among other top officials of government were part of the meeting.
Yunusa, who is also the Adamawa State Commissioner for Finance, said the states had begun to push for a review of the formula to reflect current economic realities.

His words: “The revenue sharing formula is where discussion has commenced within us to see how we can be able to have a realistic and justifiable review of revenue sharing formula.

“The real Nigerians are the ones that reside in states and local govt level and we want the state and local govt to have more revenues so that they will work for people, so that people will feel the impact and the presence of government.

“We will push for the revenue sharing formula to be reviewed and I think at the appropriate time we will make the announcement.”

Giving the figures for the April allocation, Mahmud-Dutse who also spoke at the event explained that the federation account recorded increase in revenue collection during the month of April.
He said all revenue lines from revenue generating agencies such as the Nigerian National Petroleum Corporation (NNPC), the Federal Inland Revenue Service (FIRS) and the Nigerian Customs Service (NCS) recorded increase.

He put the gross revenue generated in the month of April at N613.05bn, adding that this was N132.45bn higher than the N480.59bn received during the month of March.

He said as a result of the increase in generated revenue during the period, the committee agreed to transfer the sum of N24.5bn into the Excess Crude Account.

The fresh transfer into the ECA, according to him, brings the total balance in the account to $1.91bn.
On the amount allocated to the three tiers of government, he said the committee shared N701bn to the three tiers of government.

This is made up of statutory allocation of N613.05bn while the balance of N87.96bn was distributed under VAT.

From the N613.05bn shared under statutory allocation, Dutse said the federal government got N276.53bn, states N140.26bn, local government councils N108.13bn.

He said the sum of N49.75bn was allocated to the oil producing states based on 13 per cent derivation principle while revenue generating agencies were given N38.36bn as cost of revenue collection.

For VAT of N87.96 billion, he said the federal government got N12.5 billion, states N41.7bn and local government councils N29.19bn.

On whether the revenue under-payment which led to disagreement between the committee and the NNPC had been resolved, he said reconciliation is still ongoing.

He said: “There were some disagreement in the recent past but discussion is ongoing between NNPC and all the interested parties to resolve all matters including reconciliation of different figures from different entities. This matter will be resolved in due course.”

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