AN APPRAISAL OF THE DERIVATION PRINCIPLE IN REVENUE ALLOCATION UNDER THE NIGERIA FEDERATION

0
543

CHAPTER ONE

INTRODUCTION

1.1     Background of the Study

Revenue allocation is conceived as the transfer of financial resources from one tier of government to another tier of government, in the same country, under pre determined criteria or in any agreement to which all the benefiting units have subscribed. In Ikeji’s view, revenue allocation involves manner of distributing centrally generated revenue among levels of government as well as how each level shares the allocated amount to its component parts[1]. It connotes a practice whereby one level of government turns over a portion of the revenue it generates from taxation and other sources to another government level which is usually a lower level of government[2]. In Nigeria, revenue allocation refers to the practice where the centrally generated and controlled revenues are shared among federal, states and local governments as stipulated by the constitution without determining how the fund should be used. It is a statutory distribution of revenue from the Federation Account among the different levels of government[3]. So conceived, the implication is that there are at least two different levels of governmental authorities in the political unit.