Estimating the Autonomy of the Sub National Governments in the Context of Nigeria Fiscal Federalism
Abstract
Existing literatures on fiscal federalism in Nigeria show more concern on explaining the pattern of intergovernmental relations or providing an impressionistic view within the context of political economy of possible consequences of such relationships or on revenue allocation principle/sharing and the practice of true fiscal federalism. On that note, several alternatives have been proposed and will continue to be developed. Contrary however, this paper focused on estimating the autonomy of the sub national governments in the context of Nigerian fiscal federalism using both the measure of decentralization as coefficients of vertical imbalance and fiscal (de) centralization indicators formulae. The results of measure of decentralization as coefficients of vertical imbalance found the coefficient of V3 is very close to zero meaning that Nigerian sub national governments lack autonomy in raising revenue. This was validated by the results of fiscal (de) centralization indicators as the disparities between the revenue ratio and expenditure ratio appear to be very wide. Also, the results transfer dependency ratio appears very high showing the heavy dependency of the sub national government on the central government. The paper therefore, submits that Nigeria fiscal federalism lack the essential ingredients of theoretical anchorage of fiscal federalism that presupposes that assignment of functions to the sub national governments should be accompanied by the corresponding revenue responsibilities. On that basis recommended that to ensure the autonomy of the sub national governments, our fiscal federalism should be implemented based on the tenets of tax assignment theory.
References
Anyanwu, J.C. (1995), Nigerian Fiscal Federalism: Concepts Issues and Problems, Paper Presented at the National Workshop on Additional Sources of Revenue for Federal State and Local Governments Organized by NCEMA, Ibadan, May 7-19, 1995.
Bahl, R.W. and J. Linn (1994), Fiscal Decentralization and Intergovernmental Transfers in Less Developed Countries, The Journal of Federation, 24 (1), 1-19.
Chete, L.N. (1998), Fiscal Decentralization and Macroeconomic Management, 6, (1), 91-114
Eberts, R.W. and T.J. Gronberg (2006). Can Competition among Local Governments Constraint Government Spending . Economic Review: Federal Reserve Bank of Cleveland, 24 (1) 2-9.
Ekpo, A. H. and J. E. Ndebbio. (2004), Local Government Fiscal Operations in Nigeria, AERC Research Paper 73, AERC Nairobi, Kenya.
Hunter, J. S. H. (1977), Federalism and Fiscal Balance. Canberra: Australia National University.
Ike, D.N. (1981), Towards an Optimal Formula for Revenue Allocation in Nigeria. The Nigerian Journal of Development Studies, 1 (2), 104-109.
Kwon, O. (2003), Macroeconomic Management and Intergovernmental Relations in Korea. Public Budgeting and Finance, 9, (2), 41-60.
Kwon, O. (2008), The Effects of Fiscal Decentralization on Public Spending: The Korean Case, Public Budgeting and finance, 23 (4), 1-20.
Mbanefoh, G. (1993), Unsettled Issue in Nigerian Fiscal Federalism and the National Question. Proceedings of the 1993 NES Annual Conference, 61-77.
McKinnon, R. I. (1997), Market Preserving Fiscal Federalism in the American Monetary Union. In: Macroeconomic Dimensions of Public Finance. Mario, I. B. and T. Ter-Manassian, eds. New York: Routledge, 73-93.
McLure, C. E., Jr. (1995), Comment on Fiscal Federalism and Decentralization: A Review of some Efficiency and Macroeconomics Aspects by Vito Tanzi. In: Annual World Bank Conference on Development Economics. Bruno, M. and B. Pleskovic, eds. World Bank, 317-322.
Musgrave, R. A. and P. B. Musgrave. (1989), Public Finance in Theory and Practice, 5th ed. Singapore: McGraw-Hill.
Oates, W. E. (2006), On the Theory and Practice of Fiscal Decentralization. In: The Tiebout Model at Fifty, ed. William A. Fischel. Cambridge, M. A: Lincoln Institute of Land Policy, 1-32.
Oates, W. E. (1999), Fiscal Decentralization and Economic Development. National Tax Journal, 46, 237-243.
Olowononi, G. D. (1989), Revenue Allocation and Economics of Federalism. In: Federalism and Political Restructuring in Nigeria; Spectrum Books Ltd. 247-260.
Olowononi, G. D. (1999), Federalism and Vertical Intergovernmental Financial Imbalance in Nigeria.In: Fiscal Federalism and Nigeria’s Economic Development, Ibadan Nigeria. The Nigerian Economic Society, 189-213.
Prud’homme, R. (1995), The Dangers of Decentralization. The World Bank Research Observer, 10, 201-26.
Sarah, O. A., J. O. Ebajemito., S. C. Rapu and M. Tule, (2003), Fiscal Federalism and Macroeconomic Governance. In: Contemporary Economic Policy Issues in Nigeria.
Shah, A. (1991), The Reform of Intergovernmental Fiscal Relations in Developing and Emerging Market Economies, Policy and Research Series, No. 23, World Bank.
Taiwo, I. O. (1999), Fiscal Federalism: A Theoretical Framework. A Paper Presented at the Annual Conference of the Nigerian Economic Society, 3-23.
Tanzi, V. (1995), Fiscal Federalism and Decentralization: A Review of some Efficiency and Macroeconomic Aspects. In: Annual World Bank Conference on Development Economics. Bruno, M. and B, Pleskovic, eds. World Bank, 317-322.
Vincent, O. O. (2001), Fiscal Federalism: The Nigerian Experience, Fourth Public Lecture, The Nigerian Economic Society.
All right reserved. No part of this book may be reproduced or transmitted in any form or any means without prior permission in writing from the copyright owner.
