Essay
By Mike Ozekhome, SAN
INTRODUCTION
IN parts 1 and 2 of this important topic, we dwelt on concept and meaning of federalism, history of federalism in western thought, reasons for federalism, the Nigerian federal structure and the issues in its origin and creation in Nigeria. Today, we shall continue with the more controversial and vexed issue of “True Federalism” or what some people refer to as “Fiscal Federalism”.
TRUE FEDERALISM
True federalism is essentially a derivative of federalism as a concept. It is also referred to as fiscal federalism. This deals essentially with how revenues are generated and distributed among federating units in a federation; an issue that has proven to be highly emotive and touching in Nigeria.
DEVOLUTION THROUGH THE SHARING OF AVAILABLE BUT LIMITED RESOURCES
The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries. – Winston Churchill
Revenue allocation refers to the mechanism for sharing the country’s financial resources among the different tiers of government in the federation, with the overall objective of enhancing economic growth and development, minimizing inter-governmental tensions and promoting national unity.
According to John Idumagbo, the colonial policy of divide et impera reinforced the security of communal identity, thus making the task of tribal integrities more complex. No doubt, politics was seen as a struggle among the various factions, first, to establish regional dominance as a spring board for the acquisition of national wealth. We have been forced to believe that unless our “own people” are in power, we cannot secure those amenities that are disbursed by the government. What resulted from this belief was dirty politicking in revenue allocation, the siting of industries, building of roads, and quota system of admission into Universities, award of scholarships, contracts and statism in appointments to the federal public service.
COMMISSIONS, COMMISSIONS, COMMISSIONS
From the Willinks Commission in 1958 to the Irikefe Commission in 1975, the vast increase in bad government with its attendant proliferation of states has been seen as a way of diffusing economic and political power. As early as 1943, Dr Nnamdi Azikiwe had suggested the creation of eight states in Nigeria. In 1947, Late Obafemi Awolowo argued for a federal Constitution based on the ethnic factor. Ostensibly, the impetus for this agitation was the desire to minimize inter-ethnic tension. The most fundamental issue in State creation is fiscal autonomy.
Nigerian federalism has stubbornly shunned fiscal autonomy, or what may be referred to as resource control. The calculation has been for the majority to create States and LGAs based on population so they can share from the common pool of oil resources. As new States and LGAs emerge, so does a complex calculus of resources distribution, which of course, must be based on justice, equality and fairness. But the Nigerian situation is anomalous. Most of the states can hardly generate 10% of the annual revenue from internal sources. States depend almost solely on statutory allocations from the Federation Account. Thus, most states are no better that glorified local governments as they lack the capacity to generate internal income or revenue.
In 1960, largely autonomous regions possessed the residual powers in the federation and functioned almost independently. Even before the First Republic collapsed, the federal government was asserting greater powers. In particular, it controlled the national economy and possessed emergency powers to intervene in any region where law and order had broken down, as it did in the Western Region in 1962.
The federal government took over state and local government functions for a variety of reasons: the transfer of legislation and administration of mining rent and royalties to the federal government; centralisation of the marketing boards, fixing of producer prices; right to revenues emanating from company income tax, import, export, petroleum profit (PPT), introduction of uniform rates in personal income and sales taxes while the states were to administer the taxes. The Okigbo Commission report in 1980 made it mandatory for all for all federally collected
– Mar. 22, 2021 @ 10:55 GMT
Tags: Federalism as a system of government (PART 3)
