The Inadequacy of Revenue Transfer and use of Equalisation to Sustain Public Goods Provision by Jurisdictional Government in a Federal Setting

Abstract

As will be presented later it is perhaps important to mention here that revenue sharing (intergovernmental transfer) or grants are not based on original revenue, therefore, it simply redistributes resources across jurisdictions. This approach does not provide subnational government with own revenues; subnational governments only have autonomy on spending the revenue. Tanzi (1999) posits two forms of fiscal balance that are present in any transfer from the central government to subnational government and they are vertical fiscal imbalance and horizontal fiscal imbalance and are both addressed in this article. This article is purely based on qualitative research that uses secondary sources of information to posit revenue transfer in the provision of public goods. The article posits that different types of transfer exist at any particular time to jurisdictional governments. Every country of the world at one point or the other the central government would have to transfer revenue to its jurisdictional governments with the aim of ameliorating the lives of its populace. The importance of public goods and services provision to the communities cannot be underestimated if only for the purpose of helping to alleviate poverty of the people. Therefore it is important to posit the need for revenue transfer and the subsequence outcome in public goods and services provision. It is hoped that people will continue to note that transfer by central government to jurisdictional government is done on the bases of equity and fairness as some to ensure an equitable distribution of income across the whole spectrum of the country, with the hope to ameliorating the lives of the people. Therefore the payment of taxes should not be seen as a burden but a necessary obligation for the benefit of mankind in the society.  .