1. Vertical Allocation formular
2. Horizontal Allocation formular
THE VERTICAL ALLOCATION FORMULAR (VAF)
This is the process in which the formular shows the percentage allocation to the 3 tiers of government. They are, the federal, government, the state government and the local government.
In this process, the formular is applied vertically to the total volume of disbursable revenue in the federation account at a particular point in time. The vertical allocation formular allows every tier of government to know what is due to it, the federal government on the other hand and the 36 states and 774 for local government on the other.
THE HORIZONTAL ALLOCATION FORMULAR (HAF)
These are applicable to the states and local government only. It provides the basis for sharing of the volume of revenue already allocated enbloc to the 36 states and 774 to the local governments. Through this application, the principles of horizontal allocation formular, the allocation due to each state or local government is determined. Thus, this can conveniently be concluded that the vertical allocation formular is for inter-tier sharing between the three tiers of government while the horizontal allocation formular is for Intra-tier sharing amongst 36 states and the 774 local governments in Nigeria.
INSTITUTION FRAMEWORK FOR REVENUE ALLOCATION IN NIGERIA
S/N
|
INSTITUTION
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ROLE
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1
|
State Joint Local Government Account
|
This determines monthly disbursement
from the state joint local government account. It comprises of
representatives of the state and the local governments.
|
2
|
Federal account Allocation Committee
|
It determined monthly disbursements from
the federation account it comprises of representative of the federal, 36
states government, RMAEC, OAGT and other revenue agencies.
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3
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Central Bank of Nigeria
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A custodian of the federation account
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4
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Revenue mobilization allocation and
fixed commission
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Monitor revenue accruals into and
disbursements from the federation account. It determines the allocation
indices
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