Taxation, revenue allocation and fiscal federalism in Nigeria: Issues, challenges and policy options (original) (raw)
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African Journal of Political Science and International Relations
This paper joins the debate on the fiscal policy of the Nigerian government in terms of the revenue allocation formula of the federating units which has been a recurring theme in the country's political existence. A review of revenue allocation formulas shows that the tools used as a measure to allocate and distribute revenue had been more of political gerrymandering, with each regime choosing which formula suits them without minding how the federating units reacts (Adedokun, 2002). An introspective analysis of the various Decrees enacted by the military regimes and the Acts between 1979 and 1983 shows that the southern part of the federation had been denied of their rights in maximizing full potentials of the resources in their territory. With all these, it portends that revenue allocation and distribution from 1968 to 1989 was not in line with true fiscal federalism as should be practiced. It is therefore recommended that the government and stake-holders at all levels should parley and do the needful by reviewing the current sharing formula with a view to correct the anomaly that have bedeviled revenue allocation and distribution over the years. Simply put, there should be decentralization in the generation, distribution and allocation of revenue where states should manage their resources as it will reflect true fiscal federalism as practiced in civilized clime. The constitution remains silent on the cardinal issue of derivation and that is why today the question of who gets what, when and how in terms of revenue allocation and sharing remains politicized and a recurrent issue in Nigeria till today.
Fiscal federalism in Nigeria: Theory and practice
Fiscal federalism, which mirrors the amount of fiscal autonomy and responsibility accorded to subnational government, has been an important subject in the policy equation of many developing, transition, and developed countries.. This paper, therefore, examined the evolution, structure, and practices of fiscal federalism in Nigeria. In achieving this, the paper adopted both descriptive and analytical methods by relying on secondary sources for data gathering. The paper revealed that Nigeria has not operated as a true federation since it adopted a federal constitution. Fiscal responsibility and taxing powers still remain considerably centralized. The practice of fiscal federalism in Nigeria has been inhibited by several factors which include, the dominance of the federal government in the revenue sharing, the protracted period of interregnum rule of the military, and over-reliance on the revenue from the Federation Account. The paper therefore concluded that the federal government ought to devolve some of its tax powers to state governments in order to stimulate healthy fiscal independence and competition among states.
FISCAL AND ECONOMIC FEDERALISM IN NIGERIA: ISSUES AND CALLENGES
The concept of the Nigerian fiscal federalism has elicited a lot academic discourse in the recent past. This is because the economic development of the country is tied to the way and manner of revenue generation and management. This paper, therefore examines the Nigerian fiscal structure and the challenges facing the Revenue Mobilization, Allocation and Fiscal Commission (RMAFC) in determining an acceptable revenue sharing formula. It also inquired into the revenue generation efforts of the three tiers of government and how the application of true fiscal federalism will boost the Internally Generated Revenue (IGR) which will lead to rapid economic growth and development. This article is based on descriptive survey and it also employs secondary method of data collection. Findings revealed near total dependence on the revenue from federation account among the three tiers of government and total abandonment of internal revenue generation efforts. The neglect of IGR efforts have been seen to be responsible for the slow economic growth in the country. CHAPTER ONE
International and Public Affairs, 2018
Imbalances in Nigeria's federal arrangement have been a constant source of conflict in Nigeria's politics. Fundamentally, the federal structure was adopted to accommodate Nigeria's multi-ethnic nationalities. The dissatisfaction among the federating units underlies an unending search for an acceptable revenue sharing formula contention. The problem identified is that the current formula gives more revenue to the Federal government rather than to the State and Local Governments that have greater base and responsibilities for the provision of social welfare to the people. The arrangement stifles the sub national governments' ability to provide social welfare and accomplish other statutory responsibilities, aggravates crises of relative deprivation, accentuates corruption and intensifies ethnic politics. Being ex-post facto, the paper uses qualitative expository analysis to examine the nature and character of Nigeria's fiscal relations and the implications for socioeconomic development. The finding is that Nigeria, being a consumptive mono economy, is overly susceptible to external shocks. The country therefore, needs to allocate more revenue to the sub-national governments in order to encourage an integrative, bottom-up, people-oriented development. It recommends that the vertical revenue allocation formula be restructured in the following proportions: federal 35%; state 40%; local government 25%. Moreover, derivation principle should be given primacy in horizontal allocation formula to encourage competition among the tiers of government. The economy should be diversified to reduce over-dependence on federal allocation while the fight against corruption should be sustained.
Fiscal Federalism in Nigeria: An Analysis of Issues and Challenges
The paper posits that fiscal federalism is a particular pattern of constitutional division of revenue powers and responsibilities among levels of government. The federal government however has occupied a very strong position vis-à-vis the State and Local government since the 1970's in Nigeria. This is because most of the power (financial and legislative) relating to economic development has been explicitly centralized at the federal level. It is the position of the paper that a high level of fiscal decentralization is required in Nigeria because of the unfair revenue sharing formula and the need to resolve the controversial issues surrounding the contentious fiscal federalism in Nigeria. Apart from recommending a substantial review of the fiscal system, it draws attention to the political imperatives of a constitutional modification of the fiscal arrangement and adequate compensation for those who produce the 'commonwealth' among others.
Revenue Generation, Fiscal Federalism and the National Question in Nigeria
KIU Journal of Humanities, 2023
Revenue generation is concerned with all financial incomes of government that include the greater part of its proceeds that are related to monies generated in the economy while fiscal federalism are monetary principles and general framework designed for assigning functions to the different levels of government through appropriate fiscal tools for carrying out those functions. In present-day Nigeria, there are political values peculiar to federalism that could assist the political leadership to find solution to some of the sweltering national question. The essence of this treatise is to assess revenue generation, fiscal federalism and the national question in Nigeria. The objective of the study is to ascertain whether the current revenue generation and allocation formula and the fiscal system have impact on the issues raised in relation to the national question. The method used in collecting data was through secondary sources obtainable from reading relevant literature, like academic journals, textbooks and e-resource materials from internet. Data was analyzed and presented through expository and descriptive approach. Finding from the study showed that there is over centralization of the fiscal policies. Nigeria"s federalism seems not to have addressed the issues that have emanated from the agitators of the national question. It is recommended that Nigeria"s fiscal system be reformed to meet up with challenges brought about by the imbalance in the provision of developmental projects to the different sectors of the economy which has led to the disharmonious agitations from the various regions of the country consequent from dissatisfaction with fiscal federalism.
THE INDISPENSABLE ROLE OF TAXATION FOR STATE DEVELOPMENT IN NIGERIA
___________________________________________________________________________ A moment of reflection on the current situation of today's development in Nigeria suggests that the acquisition of that power stated by a renowned economist Nicholas Kaldor, of postwar generation who was asked to say his view on the relationship that exist between taxation and state development, enumerated a lot of things but summarized his words in one line: "the heart of a state development lies on taxation", cannot be taken for granted. This paper therefore described the situation of taxation in Nigeria and enumerated the indispensable role of taxation for state development. Primary and secondary data were used. The primary data were collected from the distributed questionnaires while the secondary data were collected from the World Bank Indicators. The data were analyzed and they showed that taxation contributes less to GDP of the Nigerian economy since the IMF threshold of tax revenue to GDP is 15% while the highest taxation was added to the Nigerian GDP is 2.3% in 2010. The paper therefore, concluded that taxation is indispensable for the development of a nation (there is a positive relationship between taxation and state development) and that the ability of tax to stimulate economic growth or development in Nigeria will result from the deliberately designed regimes that will encourage compliance of those who should pay this tax. Hence, the paper recommended that all Nigerians should endeavour to pay their taxes and while this is done, the government should be set to achieve promotion of fiscal responsibility through government transparency and judicious use of revenue generated, promote economic stabilization, and correct market failures or imperfection and to facilitate economic growth.
Fiscal Federalism and Challenges of National Development in Nigeria
European Journal of Social Sciences
In emerging and developmental state of Nigeria, the construct of federalism has continued to attract gamut of attentions due to its configuration and cosmetic nature. The Nigerian state since amalgamation of the 1914 and subsequent constitutional development that ushered in federalism, revenue allocations and transfers of resource control had become contending issues and debates that had propelled lingering questions on Nigerian federal practices. The witness is the persistent struggle for redrafting of revenue allocation parameters and quest for restructuring. The most worrisome is the power of government at the centre determining what constitutes revenue allocations and how it would be shared among the federating units. However, it is against this backdrop that the study appreciates the intergovernmental fiscal relations, institutions and measures aimed at controlling excesses and imbalances amongst the tiers of government in Nigeria. Methodologically, the study utilized documenta...
Fiscal Federalism and National Development in Nigeria: Issues and the way
the 2021 International Conference on Nationhood and the Quest for Restructuring in Nigeria, organized by the Faculty of Humanities and Social sciences, Al- Hikmah University, Ilorin, Nigeria. , 2021
In Nigeria, fiscal federalism is marked by constant struggle and advocacy for reform and resource control, mostly as a result of the disruptive tendencies in disaggregate federalism. The distribution of tasks among the federal system's component entities, namely the federal, state, and local governments, is one of the major problems facing Nigeria's fiscal federalism and national development. This paper looked at Nigerian fiscal federalism, challenges with the sharing and allocation principles, as well as offer a path forward to decrease the polity's internal conflicts. Nigeria’s fiscal system focuses more attention on revenue sharing than generation. Instead of stimulating efforts toward diversification of the economic base for a virile and sustainable economy, over-dependence on crude oil has become a driving force of regional agitations. The Nigerian government should strive to adopt a uniform derivation principle to guarantee development and reduce agitation for resource control. Furthermore, adequate emphasis must be put on state equality and the development of natural resource-producing regions. Also, revenues should be shared based on the responsibilities of each tier of government. In addition, attention must be drawn to economic diversification to allow other viable industries such as Agriculture to contribute substantially to the nation’s Gross Domestic Product
Tax Reforms as a Panacea to Effective Fiscal Policy in Nigeria
Nigeria revenues have historically been low and still dependent on the oil sector for his income despite the present administration promotion of economic diversification. This study examines tax reforms as a panacea to effective fiscal policy in Nigeria. Data were derived from the review of journals, textbooks, newspapers and internet. Findings shows that there is a gradual shift from oil to non-oil sector, revenues generated from taxes have become part of the national budget; many organizations have been integrated into tax system of the government. This resulted to improvement in the provision of infrastructure in Nigeria. So far, attention of the government is on formal sector for his revenue generation and the informal sectors are neglected. Given the huge gap on our fiscal policy deficit, the discourse recommends that a broad-based comprehensive scheme should be designed to fully harness the potential revenue from the formal and the informal sector. Tax incentives should be internationally competitive and also to be restricted to such important sectors such as, export-oriented industries, industries located in rural areas and solid minerals development. The government must be honest and more transparent with regard to the way public funds are dispensed so that the citizens can be motivated to pay their taxes.