State governments clamouring for new revenue formula to be able to pay the new minimum wage recently signed into law by President Muhammadu Buhari may have to look elsewhere for additional resources.
This is because the Revenue Mobilisation Allocation and Fiscal Commission says that the constitution needs to be amended before the states can get additional substantial resources they require to cater for the obligations imposed on them by the Minimum Wage Law.
Acting Chairman of RMAFC, Mr Umar Gana, told our correspondent that there were other sources of revenue that both the federal and state governments could explore in order to meet their financial obligations.
Gana said that some of the determinants of the revenue formula were the constitutional responsibilities of each tier of government, adding that it was only by amendment of constitutional responsibilities that states could enjoy additional substantial funding in the magnitude desired by the state governments.
According to Gana, both the states and the Federal Government are competing for resources to carry out responsibilities imposed on them by the constitution adding that while the Federal Government has exclusive responsibilities, both tiers of government are tied on concurrent responsibilities.
He said, “Review of revenue formula, though desirable, may not be the perfect solution and in any case, not the only solution.
“The review that is demanded by states may require a constitutional amendment to review exclusive and concurrent functions.”
Gana added that the stand of the RMAFC is that both the federal and state governments can make more money by reviewing the 1993 Production Sharing Contracts with International Oil Companies, adding that the contracts were due for review since 2008.
He said that although RMAFC had consistently called for the review of the PSC, no action had been taken thereby leading to the loss of billions of naira by the country.
According to him, if the nation had harnessed the potential inherent in the review of the contracts which were entered into since 1993 with the oil multinationals, the cry for review of the revenue formula would have abated because more resources would be available to all tiers of the government.
He, therefore, called for “increasing revenue by renegotiating 1993 PSCs that became due since 2008 and increasing Joint Venture Contract production from the current 800,000 barrels per day back to the 1,800,000 barrels per day of the past.”
Gana regretted that after organising a national workshop for states on how they could increase their Internally Generated Revenues which was hailed by the states, only two states had taken advantage of the offer of RMAFC to localise the workshop for their states.
Our correspondent reported that five years after RMAFC completed work on a draft of a new revenue formula for the country, the draft has yet to be presented to the National Assembly by the Presidency.
A former President, Dr Goodluck Jonathan, and the current President, Muhammadu Buhari, had frustrated efforts to complete the process required to give life to the new formula because they did not want the Federal Government to lose funds to the subnational governments.