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Federalism And Revenue Allocation In Nigeria: A Critical Evaluation Of The Derivation Principle
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In spite of its recommendation, the military nevertheless proceeded on
their own rule-of-thumb for virtually the rest of the rule. But, as the
12 states had meanwhile been further subdivided into 19 states (with a
new federal capital also carved out), and as the take-over by the
civilian was approaching under a fresh constitution, the Aboyade
Technical Committee was empanelled in 1977. The incoming civilian
government however, had its own ideas of how to go about correcting
regional disparities and therefore established the Okigbo Commission in
1979.
There have been twists and turns at every point about which
allocation principles were dominant, tried, suggested, accepted or
rejected. These principles find their parallel in the dominant political
attitudes of the day in the fortunes of party alliances and in the
variations of different revenue sources with the changing fiscal land
scale. And politicians of different ideological perspectives and party
colours could be expected to support and extol precisely the particular
allocation principles that were most likely to benefit their respective
constituencies on any given period, even if the same politician had to
somersault intellectually and completely reverse themselves in a
subsequent period. Leaving aside the more colourful allocation
principles (such as geographical peculiarities and surface areas) which
were variously suggested by different pressure groups, the following
represent the basic criteria for revenue sharing that has been tried at
one time or the other in the series of fiscal review commissions in
Nigeria: derivation, even development, independent revenue, need,
national interest, continuity of government, minimum responsibility,
relative population size, financial comparability, equality of access to
development opportunities, national minimum standards for national
integration, different degrees of fiscal efficiency. New indicators
continue to be indigenously devised, but not surprisingly the issues are
still not yet (and probably cannot be) permanently resolved.
Long,
complex and often confusing as the list of principles may be, they are
still substantially meant to address only one aspect of the regional
development problem; namely the distribution of any given sum to be
allocated among the various member states or regions, the problem of
establishing among different levels of government within the federal
system was always another matter, approached differently by the
different review commissions in Nigeria. So was the problem of local
government financing. And so was the perennial issue of administering
grants from one level of government to a subordinate level. But by and
large, with the notable exception of personal income taxation, the
distribution of tax powers among the different levels of government has
been generally stable in the Nigeria fiscal system.
This research
work centers mainly on the critical evaluation and determination of the
derivation principle cum the fiscal federalism in Nigeria to determine
basically how the derivation principle has undermined the fiscal
federalism in Nigeria. This research work also delves into the
relationship between fiscal federalism and national economic growth as
well as discussing the equitability of the current revenue allocation in
Nigeria.
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