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Federalism And Revenue Allocation In Nigeria: A Critical Evaluation Of The Derivation Principle
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1.2 Statement of the Problem
The
Nigeria federalism is beset with structural imbalance. But true
federalism implies that the constituent or federating units should
pursue their own developmental programmes at their own pace, utilizing
resources within their territory and under their control. But Nigeria’s
federating units continue to be on the increase resulting in greater
pressure being put on available resources. Such pressure makes it
impossible for any unit to get fully satisfied with regard to its
shares. Paradoxically, revenue allocation in Nigeria has witnessed a
plethora of reviews as evidenced by various committees and commissions
instituted in that regard (Okeke, 2004). Yet no reliable formula has
been evolved to meet the citizen’s yearnings and aspirations. Such
experienced deficiencies have triggered off many actions among the lower
tiers of government who continually complain of fiscal imbalance.
Danjuma (1994) writes: “The existence of a federal system with its
accompanying political units necessitates a revenue sharing arrangement
to enable each unit to carry out its constitutionally assigned
responsibilities. In federalism the logic underlying the allocation of
tax power (revenue sources) does not always tally with the logic
underlying the assignment of constitutional responsibilities, there is
always a gap between the expenditure obligations and the revenue to
these levels of governance. Revenue allocation has been evolved as a
mechanism for dealing with this imbalance or gap between expenditure
obligations and revenue resources. For such allocation to be effective
and efficient, it has to have clearly stated objectives, formula,
principle and criteria.
The practice of federalism without recourse
to true fiscal federalism amounts to sheer hypocrisy. The fact that the
basic issues in Nigeria’s fiscal federalism are still hazy has equally
encumbered her progressive move towards a true nation state. During the
pre independence period, a number of commissions were set up to look
into the problems of Nigeria’s fiscal federalism. These include:
Philipson Commission (1946), Hicks-Philipson Commission (1950),
Lenis-chick Commission (1954), and Raisman – Tress Commission (1958).
However, notwithstanding the fact that each, tried to resolve the
controversy surrounding true fiscal federalism in Nigeria, the issue
persisted. This culminated in the series of other post-independence
commissions that were equally set up to provide the needed panacea on
fiscal federalism arrangement for the country. These included: Binns
Commission (1964), Interim Revenue Allocation Review Committee (1969),
Okigbo Commission (1979), Danjuma Commission (1988) etc. Given the
scenario, when the country reverted to the democratic rule in 1999, the
1989 constitution was made operational with several attempts to address
the plethora of problems associated with the country’s fiscal
federalism. However, during this period, there existed quite a lot of
controversies surrounding the nation’s fiscal practice that led to some
states in the Niger Delta region taking the Federal Government to court
(Olugbemi 2000).
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