This paper assessed the effect of Tax policies on Economic stabilization in Nigeria. Data was sourced from the Statistical Bulletin of Central Bank of Nigeria, Federal Inland Revenue Services and National Bureau of Statistics. Time series Date from 1985-2014. The variables were tested for Unit root and Co-integration and were found to have long run relationship. The result further indicated that tax polices has no significant impact on economic stabilization in Nigeria. The study among others recommend that Government of Nigeria should have fiscal neutrality in the heart when making polices, it was also recommended that Nigeria should try to reform their tax system to militate the destitutions cause by tax policy.