CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
The increasing cost of running government coupled with dwindling revenue has le various state governments in Nigeria with formulating strategies to improve the revenue base. Moreso, to improve the revenue base. Moreso, the near collapse of the National Economy has created serious financial stress for all tiers of government. Hardest hit are the state governments all of whom have experienced unusual reduction in their share of the national revenue from the federation account. Despite the numerous sources of revenue available to the various tiers of government as specified in the Nigeria 1999 constitution, since 1970s till now, over 80% of the annual revenue of the three tiers government of movement come from petroleum. However, the serious decline in the price of oil in recent years has led to a decrease in the funds available for distribution to the states. The need for state and local governments to generate adequate revenue form internal sources has therefore become a matter of extreme urgency and importance. This need under scores the eagerness on the part of state and local governments and even the federal government to look for new sources of revenue or to became aggressive and innovative in the mode of collecting revenue from existing sources. The increasing cost of running government is becoming alarming some budgets find recurrent expenditures outplaying capital expenditures. This increasing cost of governance has forced some state to formulate other means of improving their revenue base. It is said that up till now the Nigerian economy has not been diversified from crude oil revenue only since the 1970s Nigeria revenue from crude oil stand over 80% of her annual revenue while other sectors such as the extractive sector and agriculture has received little or no attention or out rightly abandoned.