Abstract
The major objective of fiscal federalism is the efficient and effective distribution of functions and revenue among tiers of government in a federation in such a way that there are favourable economic outcomes which promote socioeconomic development. A close examination of the practice of fiscal federalism in Nigeria shows that the sharing of functions and revenue is at two levels: the vertical level among Federal Government, States, and Local Government Councils; two, the horizontal level among States and Local Government Councils. A close scrutiny of the sharing at both levels shows there are challenges which act as obstacle to the realization of this objective. At the vertical level, there is concentration of functions and revenue in the hands of the Federal Government. This concentration has generated a number of negative outcomes which have brought into existence one challenge in the vertical sharing axis of functions and revenue: stifling of socio-economic development. Adopting the doctrinal method of analysis, this paper examines this challenge in the light of the prescriptive principles of vertical allocation under fiscal federalism with a view to proffering solution. In the end, the paper recommends that certain functions should be transferred from Federal Government to States.
Keywords:
Fiscal Federalism
Revenue
Allocation
Vertical
Constitution and Challenge.
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