Abstract

This study examines the impact of revenue distribution system on Nigeria national development. The dependence of the thirty-six states of the federation on the center for monthly revenue has retarded the growth of some state in the federation. The present arrangement of the revenue distribution formula laid much emphasis on the revenue derivation (revenue source) at the expenses of the financial needs of state and local government. It is an issue which has been politicized by successive administrations in Nigeria both military and civilian regimes. This subjected most of the states to receive very little in spite been relatively contributing huge revenue (crude oil and VAT) to the center (FGN) compared with the other geopolitical regions. The repercussion of the foregoing is a massive proliferation of the poor more in all geopolitical zone of the nation. It was discovered that inequitable revenue distribution causes unbalance development leading to economic underdevelopment in some part of the country. The paper concludes that for Nigeria to achieve holistic national development there is need to redefine revenue distribution systems. Specifically, we recommend practicability of the administration of VAT at the state level with respect to the taxation of non-resident of the state, treatment of output and input tax, as well as taxation of goods imported into the country. The same is applicable to crude oil proceeds.