Introduction
Money, has been chosen to become the
strength and back body of any political system, in which Nigeria political
system is not excepted Nigeria as federating unit, chosen to be operational in
political, social and economy system, in lieu of the diverse culture. This
brought to separate Nigeria into different tiers, ranging from federal
government, state government and local government.
In 1914, amalgamation of Northern
and Southern protectorate that brought Nigeria into federation unit, this give
birth to disintegration of the country into three different unit.
This indicate that central, state
and local government to survived there will be minimum resource independent
revenue and full control of such revenue in order to discharge it
constitutional responsibility.
Isaac (1986) Asserted that finance
has emerged, as the most critical policy issue in IGR in federal administration
system.
DEFINITION
No component unit of the federal system
survives without minimum independent revenue and control of the same revenue so
as to enable it undertake it statutory reasonability as initiated by the
constitution of the federal republic of Nigeria.
Fiscal federalism refers to the
allocation of tax-arising powers and expenditure responsibilities between
levels of governments. According to Sewell etal (1994) quoted in Guyer (1997),
the objective of fiscal relation among units in a federal area:-
1. To ensure correspondence between
sub-national expenditure responsibilities and their financial resources (including transfers from central government) so that functions assigned to sub- national government can effectively carried out.
2. To increase the autonomy of
sub-national government by I incorporating
incentives for them to mobilized revenues of
other own.
3. To ensure that the macroeconomic
management policy of central government are not undermined or compromised.
4. To give expenditure discretion to
sub-national government in appropriate areas in order to increase
the efficiency of public spending and improve the accountability
of sub- national officials to their continents in the provision of sub-national services.
5. To incorporate intergovernmental transfers
that are administratively, simple,
transparent and based on objective,
stable and non-negotiated criteria;
6. To minimize administrative cost and,
thereby, economize on scarce criteria.
7. To provide equalization payments to
offset the differences in fiscal capacity among states and among local governments so as to ensure that poor sub-national governments can offer a sufficient amount of key public services;
8. To incorporate mechanism to support
public infrastructure development and
its appropriate financing;
9. To support the emergence of a
government role that is consistent
with markets oriented reform;
10. To be consistent with nationally agreed
income distribution goals.
Nigeria fiscal federalism structure
involves the allocation of expenditure
and tax raising power among the federal, state
and local government. (1997:6),
position fiscal federalism is
deeply rooted in a political
arrangement called federalism” in a
federal nthere level of independence existing among the
three tiers of government. One may not perform the
constitutional responsibility
without help of other, therefore, connote that
is interference among the levels of government in term of money.
Federal government may give to
support both state and Local government to overcome the predicament, complete
capital project where necessary. No wonder, (Akindele 2009) in F. O. Okpata
etal (20120, has it that in Nigeria, Local Government expenditure has
constantly surpassed the potential for revenue sources owing to the great gulf
between their needs and their fiscal capacity.
INTER GOVERNMENTAL FINANCIAL
RELATIONSHIP
Federalism, found it hard to survive
without financial relations. This in most if not all federal counties, one of
the governmental wrangle centres on the problem of securing adequate to
discharge essential political and constitutional responsibilities. There are
basic reason that necessitate transfer of revenue resources from higher to
lower levels of government in a federation are:-
(i) The nature of the functions and revenue
resources of the three levels of
government
(ii) The variations in the revenue raising
capacities of the lower level of
government
(iii) Transfer designed primarily to encourage
particular state or loca activities.
LOCAL GOVERNMENT FISCAL RELATIONS
Local Government is established by
law and empower the state government to oversee the functions and activities in
conjunction with federal government in finance, so as to be viable in
discharging if constituently reasonability.
The laws that give the state power
to create local government thereafter, empower the local government to
generating their fund from the following areas:
(1) Internal and external revenue
(2) Recurrent and capital revenue
Internal revenue resources: This money generating through tax payers, such as
income tax, pol tax, rates, licenses fine, fees, earning from commercial
undertaking, investment revenue, sales of local government property etc.
(b) External revenue resource: statutory
allocations from federation account 25% and state government – 10%. Under the
1979 and 1989 constitution, grant local government power to receive from the
state government 10% white 25% from the federation account. Another area local
government could get their finares are follows, grant, lake-off grant, special
grant, equalization grant, loans from financial institution, world bank,
central bank of Nigeria (BN).
2(a) Recurrent revenue: This is the among given
to the local government annually to capacitating if function proper, N. I.
Urauako (2011:15) defined recurrent revenue as money which local government
authorities receive every year to enable them unction properly. They include
taxes, rate licenses, fine fees, earning from commercial undertakings, rent on
government properties, statutory allocation, VAT, grants, interest, repayment
dividends etc.
Capital
revenue: Due to non viability of the Local Government, could hesting it to
apply or seek for loan from financial institution as well as grant from state
and federal government to enable them financial capital project and acquisition
of fixed assets.
From the areas with which local
government obtained it revenue from, to be able to find us projects as
enuliated to create local government would not have achieve. The lives of
people in the local communities with which constitution is looking at from both
state and federal government are meant to enable them perform as stipulated by
the constitution of the republic of Nigeria.
Conclusion
In conclusion, the intergovernmental fiscal relation
is bond that held together the federal, state and social government together
therefore, no level of government can stand without the aid of other levels as
in the case of federalism.
The joint share which harness by the
mobilization and fiscal commission that ensure every level of government take
home the specific amount from federal allocation account in order to perform
their constitutional responsibility.
Recommendation
The birth of the Local Government
and viability of Local Government lies on the financial allocation to do more
of its responsibility, to be responsive there should be increase of fund of the
Local Government, for it is the government that nearer to the people, so as to
increase performance in the countries.
As their increase their finances
more work or performances should accorded on then because he who much is given
much is expected of him