Fiscal Federalism and Tax Revenue Allocation Among Nigerian States

This study examines the structure of fiscal federalism and its implications for tax revenue allocation among Nigerian states. Nigeria operates a three-tier fiscal system in which tax powers and revenue sharing are distributed between federal, state, and local governments through the Federation Account and the Revenue Mobilisation Allocation and Fiscal Commission formula. The current allocation framework has been criticised for fostering fiscal dependency among subnational governments, weakening incentives for own-revenue generation, and creating regional inequities in public service provision. Using a descriptive and comparative design, the study analyses Federation Account allocation data, state IGR reports, and fiscal transfer statistics published by the Office of the Accountant-General of the Federation over five years. Descriptive statistics, trend analysis, and comparative tables across the six geopolitical zones are employed. The study expects to find that states in the South West demonstrate the highest self-sufficiency ratios, while states in the North East and North West remain most dependent on federal transfers, constraining their developmental autonomy. Recommendations include revising the revenue allocation formula to strengthen IGR-based incentive components, accelerating the implementation of tax jurisdiction reforms recommended by the Presidential Fiscal Policy and Tax Reform Committee, and improving inter-governmental fiscal coordination. This research provides an accessible undergraduate introduction to the intersection of taxation and federalism in Nigeria. Keywords: fiscal federalism, revenue allocation, tax jurisdiction, subnational finance, IGR.