The informal market employs a greater proportion of the labour force in developing countries compare to the formal market. This market or sector is usually assumed to be anti-developmental to communities in which it exists. This is because, part of its income, though latent, may not be captured due to its irregular and unstructured nature. This study was therefore carried out to investigate the effect of this uncaptured informal market income on revenue generation at the community level. Specifically, the study sought to ascertain if captured informal market income could increase the standard of living of community residents and if uncaptured informal market income affects communal development. To determine if uncaptured informal market income affects a community’s economy was also a specific objective of this study. The study adopted a survey research design where questionnaire were administered to fifty respondents (informal market operators). These data were analysed and hypotheses were tested using chi-square (x2) and product moment correlation. The study revealed that government at the grassroot level is not adequately capturing income from the informal market, again, the level of community development is not dependent on the captured informal market income. Besides, a significant ant positive relationship exists between the uncaptured informal market and a community’s economy. It was therefore recommended that government should build a more effective informal strategy to tax the informal market. Staff of the internally revenue service should be receiving regular training to enhance to efficiency effectiveness.