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Friday, 27 September 2013


In our attempt to proffer better ways of doing and implementing transparent revenue derivation and sharing formula we turned to the United States where it is a global view that accountability is their key word even as enforcement mechanisms are in place to check loopholes and avenues of looting of public fund.  From Wikipedia the online Encyclopedia we turned to and fortunately we could decipher that the budget of the US government often begin as the President proposals to the US Congress which recommends funding levels for the next fiscal year, beginning October 1st.  However, congress is the body required by law to pass a budget annually and to submit the budget passed by both Houses to the president for signature.  Congressional decisions are governed by rules and legislation regarding the federal budget process. In Nigeria we have grown used to the frequent and regular acrimony that ensues each time the Federal Government is required to present budget proposals to the National Assembly of Nigeria which by law is authorized to approve all releases and appropriations.

Although intra-partisan quarrels are noticed in the US but not to the near-infinite and permanent dimension that BUDGET PRESENTATION AND PROCESS OF PASSING INTO LAW AND IMPORTANTLY IMPLEMENTATIONS ARE DONE IN Nigeria. In the US, Budget committees set spending limits for the House and senate committees and for appropriation subcommittees, which then approve individual appropriation bills to allocate funding to various federal programs.

Note however, if congress fails to pass an annual budget (as has been the case since 2009) a series of appropriation bills must be passed as “stop gap” measures.

After congress approves an appropriations bill, it is sent to the president who may sign it into law, or may veto it (as he would a budget when passed by congress).  A vetoed bill is sent back to congress which can pass it into law with a two thirds majority in each chamber.  Congress may also combine all or some appropriation bills into an omnibus reconciliation bill in Addition, the            president may request and the Congress may pass supplementary appropriation bills or emergency supplementary appropriations bill.

BUDGET PRINCIPLES:  The United States constitution [article 1, section 9, clause 7] states that ‘no money shall be drawn from the treasury, but in consequence of appropriations made by LAW and regular statement and account of receipts and expenditures of all public money shall be published from time to time’. Each year, the President of the US submits his budget request to Congress for the following fiscal year as required by the Budget and Accounting Act of 1921. Current law [31 U.S.C and 1105[a]] REQUIRES THE President to submit a budget no earlier than the First Monday in January and not later than first Monday in February. Typically, Presidents submit budget on the first Monday in February. Wikipedia however recalled that the submission has been delayed, in some new President’s first year when the previous President belonged to a different party.

IMPORTANT POINTS TO NOTE: The Federal Budget is calculated largely on a cash basis. That is REVENUES AND outlays ARE RECOGNIZED WHEN TRANSACTIONS ARE MADE. Meaning that the full long term costs of entitlement programs such as Medicare, social security and federal portion of the MEDICAID are not reflected in the Federal Budget. By contrast, the same Wikipedia that we relied on for the brief research also let us know and appreciate the fact that many businesses and some other national governments have adopted forms of accrual accounting, which recognizes obligations and revenues when they are incurred. The cost of some federal credit and loan programs, according to provisions of the federal credit Reform Act of 1990 are calculated on a net present value basis.

FAST FORWARD TO THE US MAJOR RECEIPTS CATEGORIES: Whereby we are informed that in FISCAL YEAR 2012 THE Federal Government collected approximately $2.45 tril in tax revenue; up from $147 bill or 6% versus FISCAL YEAR 2011 revenues of $2.30 tril. Primary receipts categories included INCOME TAXES [$1, 132 bill or 47%]; social security/social insurance taxes [$845 bill or 33%] and CORPORATE TAXES [$242 bill or 10%]. Other Revenue types included excise, estate and gift taxes. REVENUE rose across all categories in FY2012 versus FY 2011]. FY 2012 revenue were 15.8% GDP versus 15.8% GDP in FY 2011. TAX REVENUE averaged approximately 18.3% of GROSS DOMESTIC PRODUCT over the 1970-2009 periods, generally ranging plus and minus 2% from that level. Tax revenues are significantly affected by the economy. RECESSIONS typically reduce government tax collections as economic activity slows. For example tax revenues declined from $2.5 trillion in 2008 to $2.1 trillion in 2009 and remained same in 2010.

An interesting dimension is the way the US government spends fund for research. The US federal budget has been criticized for spending on research and action on HARM REDUCTION out of proportion to magnitude of underlying threats. For example HEART DISEASES, CANCER, STROKES, RESPIRATORY DISEASES, DIABETES, AND ALZHELMERS diseases claimed about 1, 650,000 US lives in 2007, when the government spent about $9.6 billion RESEARCHING WAYS TO ALLEVIATE THOSE ILLNESSES. In contrast, terrorism had claimed about 300 lives per year an average over the previous decade, but $150 billion was spent to prevent terrorism, not including even more costly defense and war expenses. However, a major terrorist attack can cost substantial economic disruption.

(1) Huge expenses spent on salaries and allowances of GOVERNMENT OFFICIALS at the center in both the Executive and especially the Legislature must be pruned down and the payment system opened up so Nigerians can access correct information of the exact and actual amount spent in servicing the legislature which for now from available findings are prohibitive and outrageous. It is a crime against humanity that while the provisions made for research and provision of other essential services in the health and educational sectors including Federal Roads network dwindle by the day and mostly unaccounted for whereas legislators pay themselves huge allowances outside of what this REVENUE MOBILIZATION FISCAL AND ALLOCATION COMMISSION publishes to Nigerians will not augur well for an economy that desires to be stable and advanced.  This commission must fashion ways and means of independently verifying the actual allowances paid to themselves through their own financial mechanism at the National Assembly. 

(2) In the event that the constitution may not be realistically amended to accommodate the radical provisions for the creation of part time legislatures at both national and subnational levels, then payment of basic salaries to the National Assembly members must be based on MERIT; COMPETENCES; SKILLS AND ACADEMIC QUALIFICATIONS OF THE INDIVIDUAL MEMBERS since CIVIL SERVANTS AT BOTH LEVELS ARE SO CATEGORIZED. Anything outside of this constitution methodology of payment is tantamount to DISCRIMINATION ON ACCOUNT OF STATUS which is strictly forbidden in chapter four of the constitution of the FRN [1999 as amended].

(3)   Strategies for generating better and enhanced incomes from other sources such as agriculture and solid minerals which abound in all parts of the country must be found even as we propose introduction of enforceable provisions in our statutes to engender practice of real fiscal federalism and resource control so the component parts own and administer their local resources and only pay royalties and taxes to the Federal Government and distribution of key federal budgetary releases should be done in such a way that states are encouraged to bid and compete to win federal funding for strategic facilities that will serve their people and develop their communities especially the mineral producing and agricultural rich communities. OVER RELIANCE ON CRUDE OIL REVENUE IS LAZY AND UNSUSTAINABLE on a longer term. THIS BODY SHOULD RECOMMEND CREATION OF SOCIAL SECURITY AND SOCIAL INSURANCES TAXES to be collected from business for the care of our AGED POPULATION AND THE VERY VULNERABLE MEMBERS OF THE SOCIETY just as is done in other developed societies so we can reduce MASS POVERTY; MALNUTRITION AND HIGH DEATH RATES…this could also discourage GOVERNMENT OFFICIALS from amassing wealth from the public fund under their custody. WE SUPPORT THE NEW MODEL BEING WORKED OUT BY THIS REVENUE COMMISSION WHICH IS ANCHORED ON HOW TO BAKE BIGGER NATIONAL CAKE RATHER THAN THE PERENNIAL EMPHASIS WE PAY TO SHARING THE FAST DEPLETING NATIONAL CAKE. THIS COMMISSION SHOULD MONITOR CUSTOMS; IMMIGRATION AND OTHER REVENUE YIELDING AGENCIES SO THEY ARE COMPELLED TO MAKE RETURNS APPROPRIATELY TO THE FEDERAL TREASURY. MOST OF THESE AGENCIES CORNER SUBSTANTIAL PERCENTAGE OF THEIR REVENUE TO SERVICE FRIVOLITIES AND OTHER MUNDANE AND EXTRA-CONSTITUTIONAL EXPENSES and we believe that all the loose ends in generating revenues and taxes must be abridged and strict penalties recommended for indicted offenders in the competent courts of law.  This commission should continue to encourage the synergy being built between it and credible civil society organizations in the country even as we propose the setting up of a VIBRANT CIVIL SOCIETY/NGO’S/CBO’S DEPARTMENT to properly coordinate relations with the larger members of the civil society for the promotion of open government, transparency; accountability and zero-tolerance to corruption. We acknowledge that the current management under the able leadership of a technocrat of note Engineer Elias Mbam has brought about transformation in the practice of OPEN AND ACCOUNTABLE MANAGEMENT and it is our call that other agencies learn from this agency even as we urge that further and better radical transformational measures be introduced like intensive training and capacity building of the staff of this commission and recruitment of younger qualified Nigerians on the basis of merit to take this organization to the highest level of achievements of their mandate under this current management that is forward looking and visionary. The fuller presentation of HURIWA will be submitted within one week. I thank you for listening.

Comrade Emmanuel Nnadozie Onwubiko;
National Coordinator.


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