Chairman, Presidential Committee on Fiscal Policy and Tax Reforms, Taiwo Oloyede, has denied rumours that he proposed a reduction in the federal government’s share of revenue from the Federation Account Allocation Committee (FAAC).

Reacting to the reports on his verified X handle, Oloyede maintained that the committee’s recommendation was explicitly concerned with Value Added Tax (VAT).

According to the report, the tax committee recommended that the federal government should get only 10 per cent of the total FAAC allocations, allowing states and local governments to share 90 percent

“We did not recommend a reduction in the federal government’s share from the federation account,” Oyedele said.

“Our recommendation is in respect of VAT revenue, to increase the share of states and local governments from 85% to 90% and for states to discontinue with their other forms of consumption taxes which constitute multiple taxations on businesses and individuals.”

The FAAC is responsible for disbursing revenues from the federation to the federal, state, and local governments.

Recall at the September 2024 FAAC meeting in Abuja, the committee, in a statement by its Director of Press and Public Relations, Bawa Mokwa, announced that it had disbursed a total sum of N1.2 trillion earned as revenue in August 2024 to the FG, states and local governments.

The report partly wrote, “Under the new proposal, Oyedele explained [that] the distribution formula for the states and local governments would include a clause stipulating that 60 per cent of their share will be based on the principle of derivation. In practice, this means if N100 is available for distribution from FAAC, the Federal Government will take N10, all 36 states will share N36 equally, and N54 will be distributed based on derivation, favouring states with higher resource generation.

“This change in the sharing formula is part of broader reforms aimed at eliminating numerous “nuisance taxes” and streamlining the tax collection process. Oyedele noted that the Federal Government had to make this concession to get states on board with a centralised and more efficient tax collection system.

“The new approach not only simplifies tax collection but also lays the foundation for fiscal federalism, giving states and local governments more autonomy over their revenues,” said Oyedele.