IMPACT OF VALUE-ADDED-TAX (VAT) ON THE ECONOMIC GROWTH OF NIGERIA (1994-2020)

Abstract

This study examined the impact of value-added tax (VAT) on the economic growth of Nigeria. The data used in this study were mainly from secondary sources principally the Central Bank of Nigeria and the National Bureau of Statistics. The study employed time series data for a twenty-six-year period 1994 – 2020. The regression statistical model was used in analyzing the data, the model-assisted in testing the statistical significance of the variables under study. At the end of the analysis, it was found that VAT has a positive and significant impact on economic growth of Nigeria. It also found that value-added tax has a Positive impact on federally collected revenue. Thus, it concludes that the value-added tax has influenced the pattern of federally collected revenue and the economic growth of Nigeria. Based on the findings, the following were recommended; adequate supervision of the collection of VAT to ensure orderly, equitable and fair dealings in collecting VAT revenue so as to improve government revenue. Also, to curtails the illegal collections of VAT revenue by privileged insiders in order to raise the VAT revenue generated by this tax as efficiently and effectively as possible to increase contribution VAT to economic growth in Nigeria. VAT proceeds should be used to improve the living standard of the taxpayers and improve infrastructures development such as transportations, power, communication and information technologies as this will strengthen the productive capacity and motivate taxpayers in paying their taxes.