This research work was undertaken to examine the impact of taxation as a tool of fiscal policy. The study is aimed at putting together those factors that constitute those variables which the government uses to manipulate the economy. The source of data to this research work are both from gathered from Secondary data, which is from various text books, internet materials and primary data through the use of questionnaires that was filled by various respondent. The result of the research shows that in this country, a great proportion of government revenue, which should have been proportion of government revenue, which should have been generated from taxation, are lost through an ineffective system of tax administration. Hence, making it difficult for taxation to be used as a tool of fiscal policies. Effective tax administration should be put in place to ensure that everybody is brought to the tax net. They should be transparency in the part of the government in providing the social amenities to the populate to encourage people to pay their tax..