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This work is prompted by the shortage of revenue accruing to the federating units in Nigeria. It exposes the potential of taxation
as an alternative and or additional revenue source to the federating
states in Nigeria. Using the doctrinal method of research, this work
espouses the potentials of taxation as a viable means of generating
revenue for the federating States in Nigeria. The work analyses the
problems bedeviling the implementation of taxation as a source of
revenue generation in Nigeria under the current
legal frame work, it reviewed the approach adopted by Lagos State in its quest for fiscal independence. Based on the review of Lagos State approach, the work provided the possible solutions to the over dependence of the other states on the revenue accruable from the Federation Account by providing possible means that other States could use in other to attain the success of using taxation as a means of achieving fiscal independence as currently enjoyed by Lagos State. It was found that Nigeria‘s Federal structure allows states to enact laws on taxation but the laws are over centralized in the federal legislature based on the interpretation of the provisions of the constitution and the items in both the exclusive and concurrent legislative list in the constitution. Corruption and absence of political will affects the ability of the state to obtain optimal tax success in Nigeria. It is recommended that a Constitutional review will assist in achieving tax prosperity for the component states, in the meanwhile, an active State House of Assembly that has the potential of ensuring a tax legislation that is not an infringement of the current legal regime can assist states in attaining tax prosperity. Good governance and accountability has the potential of bringing the Nigerian people on board the policy of taxation.
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