The Revenue Mobilisation Allocation and Fiscal Commission (RMAFC) has insisted that it is its remit to produce formulae for sharing revenues, including the Value Added Tax (VAT).
In a memorandum submitted by the Commission to the National Assembly on the ongoing debates on the Tax Reform Bills, RMAFC cautioned against amending the VAT sharing formula without its constitutional input.
The National Assembly is deliberating on four proposed bills under the Tax Reform and Fiscal Policy Bill.
Insisting on its exclusive constitutional authority to determine revenue-sharing formula, RMAFC said: “Only the RMAFC has the mandate to produce formulae for sharing revenues, including VAT. Any deviation from this constitutionally backed process is both inappropriate and potentially unconstitutional.”
One of the proposed bills seeks to allocate 10 per cent of VAT revenue to the federal government, while states and local governments would share the remaining 90 per cent.
Reacting to the bill, RMAFC warned against arbitrary changes to the VAT formula, noting that such actions could violate constitutional provisions and undermine its role as the impartial arbiter of revenue allocation.
“Arbitrary apportioning of percentages for VAT allocation, whether vertically among the tiers of government or horizontally among states and local governments, is both impractical and unconstitutional,” the Commission stated.
The RMAFC also pointed out the risk of public perception issues, particularly claims of bias toward states with higher production or corporate presence, which could undermine national unity and equity.
