Despite the availability of taxable resources, Oyo State continues to depend heavily on allocations from the Federal Government, with over 70% of its revenue derived from the federation account. This study investigates the persistent issues of tax evasion and avoidance, which significantly undermine internally generated revenue and impede economic development within the state. The purpose of the study is to evaluate the underlying causes of tax evasion and avoidance and assess their impact on the fiscal health of Oyo State.  A quantitative research method was employed, using structured questionnaires distributed to a representative sample of taxpayers and stakeholders across the state. The data collected were analyzed to identify the major factors contributing to tax evasion and avoidance.  The results reveal that the incidence of tax evasion and avoidance is alarmingly high. The contributing factors identified include poverty, lack of public enlightenment, and insufficient awareness of tax obligations. Additionally, respondents cited distrust in the government's ability to utilize tax revenues effectively and the perceived absence of tangible benefits from paying taxes as justifications for non-compliance.  The originality of this study lies in its empirical focus on Oyo State, offering practical insights and context-specific recommendations. It emphasizes that with targeted public awareness campaigns, improved transparency in tax utilization, and strict enforcement of tax laws, the state can significantly boost its internal revenue and reduce reliance on federal allocations.

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