Fiscal federalism in Nigeria: Theory and practice

• Main Author: Ewetan, O.O
• Format: Article
• Language: English
• Published: International Society for Development and Sustainability (ISDS) 2013-12-01
• Series: International Journal of Development and Sustainability
• Subjects: Decentralisation; Allocation; Centralism; Military
• Online Access: http://isdsnet.com/ijds-v1n3-33.pdf

Fiscal federalism, which mirrors the amount of fiscal autonomy and responsibility accorded to subnational government, has been an important subject in the policy equation of many developing, transition, and developed countries.. This paper, therefore, examined the evolution, structure, and practices of fiscal federalism in Nigeria. In achieving this, the paper adopted both descriptive and analytical methods by relying on secondary sources for data gathering. The paper revealed that Nigeria has not operated as a true federation since it adopted a federal constitution. Fiscal responsibility and taxing powers still remain considerably centralized. The practice of fiscal federalism in Nigeria has been inhibited by several factors which include, the dominance of the federal government in the revenue sharing, the protracted period of interregnum rule of the military, and over-reliance on the revenue from the Federation Account. The paper therefore concluded that the federal government ought to devolve some of its tax powers to state governments in order to stimulate healthy fiscal independence and competition among states.