Nigeria revenues have historically been low and still dependent on the oil sector for his income despite the present administration promotion of economic diversification. This study examines tax reforms as a panacea to effective fiscal policy in Nigeria. Data were derived from the review of journals, textbooks, newspapers and internet. Findings shows that there is a gradual shift from oil to non-oil sector, revenues generated from taxes have become part of the national budget; many organizations have been integrated into tax system of the government. This resulted to improvement in the provision of infrastructure in Nigeria. So far, attention of the government is on formal sector for his revenue generation and the informal sectors are neglected. Given the huge gap on our fiscal policy deficit, the discourse recommends that a broad-based comprehensive scheme should be designed to fully harness the potential revenue from the formal and the informal sector. Tax incentives should be internationally competitive and also to be restricted to such important sectors such as, export-oriented industries, industries located in rural areas and solid minerals development. The government must be honest and more transparent with regard to the way public funds are dispensed so that the citizens can be motivated to pay their taxes.