At independence, Nigeria adopted federalism as a means of coexistence and unity. But the issue of constructing a stable and acceptable inter-governmental fiscal relation has been the subject of many commissions and committees and today, the issue still evokes virulent contestations amongst politicians and academics. Thus, on several occasions, successive governments have been revising revenue allocation formula till date. So far, an acceptable formula is yet to be arrived at; in view of the agitations here and there for an acceptable formula coupled with the extreme position of oil producing region calling for total resource control if possible, the research examined the arguments for decentralization rather than centralization of revenue and expenditure and concluded that despite the genuine arguments for centralization, revenue and expenditure decentralization presently in Nigeria is a product of the 1999 constitution where the revenue and expenditure powers were vested in the central government. Any policy change could thus require an amendment to the 1999 constitution. Recommendations are made for the revenue sharing to be based on equity, fairness and justice as enshrined in the 1999 constitution, not for political and ethnic sentiment, State Joint Allocation Committee is unconstitutional and has to be abolished and State and local government should boost their internally generated revenue rather than depending on federal government for virtually everything.
