This is an eternal problems of the government which affect every citizen in Nigeria. Read more about fiscal federalism and how it works in this country. You will understand a lot of things when you read this article.
What is federalism?
Federalism is a state system based on the approach of the federation. This is the acknowledgment of the federal organization of the government by the political ideal. It has the tendency to integrate some separate states into one federation. The other principle is to convert a simple state into a federal.
The sense of fiscal federalism is based on the rule of separation of authorities among federal and regional governing institutions in the financial field.
History of fiscal policy in Nigeria
The destination of the Nigerian fiscal policy consists of two parts:
- it is intended for expanding investment in the private and public sectors;
- it also must divert resources, which are not socially advisable to those investments that have more social practicability.
Fiscal policy must help to manage the expansion rate of the Nigerian economy for the purpose of ensuring its full sustainability.
Historical development of fiscal federalism in Nigeria
Tax federalism in Nigeria is based on political, historical, economic, cultural, geographical, and social factors. In all these cases, budgetary mechanisms have been a moot point since 1946.
The problem confronting fiscal federalism in Nigeria
Fiscal federalism has always been a matter of argument in Nigeria since its inception. It is important to realize that this historic and present-day contradiction exists due to the consequences of the development of any principle of income acquisition. It is a real problem.
There are several basic questions about the problematic situation of fiscal federalism in Nigeria:
1. The problem of rent. Economic rentierism contributed to the politicization of fiscal federalism.
2. It is also begs the question of diversification. Its absence led to the oil industry issues. States are used to entering Abuja in order to receive their monthly assignment from the federation account.
It is not enough. That’s why Nigeria’s annual budget is determined by the price of a barrel of oil.
These catastrophic consequences always have a defective impact on the national economy and development.
3. The question of value and balancing merit in the federalism of Nigeria. Federalism in Nigeria is one of the most expensive. It is the result of the highly established units which can usually be absent.
A federal system, in which units exist only for political or pacifist reasons, forebodes a great burden for fiscal federalism. The main task of the fiscal federalism is to raise and spend money.
It is a fact that today a lot of states in Nigeria borrow money from banks to pay salaries to employees. They also do it to sort out other current expenses.
4. This is a common problem of corruption. Political representatives steal funds that are intended for the evolution of states.
5. This is dangerous, but there is emerging use of violence for spreading redistribution again.
The problems relating to the fiscal system of the Nigerian Federation can be defined by the status, maintenance and state’s budget regulations. Moreover, they are explained by the institutional and sociopolitical factors, which form the country’s economic policy.
According to the data above, it follows that Nigeria was a victim of the military regime and autocracy for 29 years. During this time, the institutions that remained from the colonial period were completely destroyed. Therefore, corruption, tribalism and outright embezzlement began to flourish. Unsolvable problems, which are connected with conflicting fiscal federalism in Nigeria, need prompt solutions.
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