Science and Education Publishing Journal of Finance and Economics 2328-7276 2 5 2014 07 13 Tax Evasion and Governance Challeneges in the Nigerian Informal Sector 156 161 EN SANI SAIDU Aberdeen Business School, Robert Gordon University, United Kingdom UMAR DAUDA JFE2014254 10.12691/jfe-2-5-4 2014 05 26 2014 06 11 2014 07 13 Tax evasion has been an issue of concern in the Nigerian tax system for decades. Tax evading attitude is argued to have an adverse effect on government's socio-economic and political programs.Many commentators and analyst blamed the situation on the tax authorities, for not living up to expectation with regards to tax administration; others attribute the case to the unpatriotic attitude of the taxpayers. In light of these contending positions, this study therefore, assessed the operation of the informal sector in Bauchi State of Nigeria, where tax evasion assumed to be a normal practice due to high level of informalities in the conduct of businesses within the sector. Primary and secondary data were collected and analyzed. Spearman rank order correlation test was employed to test the relationship between ethics of tax evasion and performance of government and the rho (r) value was fortified in assessing the extent of the relationship. The study findings reveal among other findings that, although its ethical to pay tax but individuals refuse to, due to bad governance and other factors (religious, political and socio cultural) and high level of illiteracy to some extent. It was recommended therefore, a deliberate and more aggressive public enlightenment campaign be embarked upon by the state government on the importance of taxes economically and otherwise.