Abstract

Abstract: One of the most contentious challenges facing the Nigerian federal experiment today is that of revenue allocation. Right from the colonial era till present, finding an acceptable revenue formula has remained intractable as the various attempts have not gained wide acceptance. This paper chronicles the various revenue commissions in Nigeria and the formulae derived there from. Data for the paper were mainly from secondary sources. The theoretical nerve of the paper is based on the nature of intergovernmental fiscal relations. The findings indicate that the derivation principle has been the main bone of contention since the discovery of oil in Nigeria. Based on this, the paper recommends a serious restructuring of the Nigerian federation to grant the various component units enough autonomy to develop at their own pace, while economic viability should be the main basis for creation of states and local governments. These states and local governments should also be encouraged to develop other revenue sources outside oil, and finally the issue of revenue allocation should be made open for all Nigerians to contribute in the true spirit of democracy.