Taxation is an essential mechanism for income creation and economic advancement in Nigeria. It constitutes a primary source of governmental revenue utilised for funding public goods and services, including infrastructure, education, healthcare, and security. Notwithstanding its significance, the Nigerian tax system persists in encountering substantial obstacles that hinder its efficiency and effectiveness. This study analysed taxation and revenue generation in Nigeria, emphasising its significance, difficulties, and potential for enhancement. The research indicated that taxation plays a crucial role in government income but is hindered by various issues, such as tax evasion and avoidance, corruption, ineffective tax administration, double taxing, insufficient tax awareness, and the prevalence of the informal sector. These limitations diminish compliance rates and constrain the government’s overall revenue-generating potential. The research indicated that ineffective tax systems and a deficiency of public confidence in governmental spending adversely impact voluntary tax compliance among individuals and enterprises. The report also found other opportunities for enhancing taxation and revenue generation in Nigeria. This encompasses the digitalisation of tax systems, broadening of the revenue base, fortification of tax institutions, execution of successful tax reforms, and enhancement of openness in public financial management. When effectively executed, these approaches can improve tax compliance, diminish revenue losses, and augment government revenue for sustainable national growth. The report suggests that Nigeria encounters substantial taxing issues, however there exist considerable prospects for reform and enhancement. Enhancing the tax system will not only increase income generation but also diminish reliance on oil revenue and foster long-term economic stability and prosperity.

Keywords: Taxation, Revenue Generation, Tax Evasion, Fiscal Policy, Nigeria, Economic Development.