Evaluating the impact of value added tax on the economic growth of Nigeria (original) (raw)
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Value Added Tax and Economic Growth of Nigeria: An Empirical Investigation
Abstract This study examined the impact of VAT on economic growth in Nigeria. Specifically, the study examined the perception of the VAT payers on Value Added Tax since inception of VAT in Nigeria, assesses the impact of adequate accounting procedures on VAT efficiency and also investigated if VAT, Petroleum Tax, Excide Duties, and Company Tax jointly has significant impact on GDP. Data was collected with the aid of a structured questionnaire administered to two hundred and fifty eight (258) respondents randomly selected from different sector of economic. While secondary data was obtained from FIRS, CBN bulletined, and other relevant document. From the analysis of data performed using multiple regression analysis and Pearson Product Moment Correlation Coefficient, the relationship that VAT, Petroleum Tax, Excide Duties, and Company Tax had with economic growth was established. Study discovered that since inception of VAT in Nigeria there has been considerably high rate of acceptance and payment. It was also shown that adequate accounting procedure spurs VAT efficiency in the country. The study also revealed that VAT, Petroleum Tax, Company Income Tax and Excise Duty were jointly and independently has significant impact on Gross Domestic Product. it was concluded that the level of VAT in Nigeria has influence on social welfare of the populace. The study recommended that government should ensure to embrace strategies that will help to maintain adequacy of accounting procedure in the tax system in order to spur VAT efficiency and also to increase the number of VAT agencies in the country to boost VAT productivity.
THE EFFECT OF VALUE ADDED TAX ON THE GROWTH AND DEVELOPMENT OF THE NIGERIAN ECONOMY
This research entitled “The Effect of Value Added Tax on the Growth and Development of the Nigerian Economy” was an attempt to investigate the relationship Value Added Tax has with the economic development of Nigeria. The years 1960 to 2012 formed the population of the study from which nineteen years, 1994 to 2012, were sampled and investigated. Secondary historical time series data of Value Added Tax), Gross Domestic Product, Petroleum Profits Tax, Company Income Tax and Custom and Excise Duties were collected by extraction from the publications of the Central Bank of Nigeria, the Nigerian Bureau of Statistics and the Federal Inland Revenue Service. The Ordinary Least Squares (OLS) Model of regresion analysis, computed using the econometric EViews computer software, was used to test the hypothesis of the research, which stated that “VAT does not have a significant statistical relationship with the economic growth and development (GDP) of Nigeria from 1994 to 2012”. From the findings, it was concluded that VAT has a significant statistical relationship with GDP of Nigeria over the years under study, hence VAT has contributed to the economic growth and development of Nigeria. It was recommended to Government to review the VAT Act with a view to blocking any loopholes that hinders it from achieving its full potentials and that the rate should be increased to between 10% and 12.5%, given that at 5% Nigeria is charging the least VAT rate worldwide, as a means of diversifying the revenue base of the country from oil.
The Impact of Value Added Tax on Economic Growth in Nigeria (1994 - 2012)
2015
This study is aimed at empirically analyzing the impact of Value Added Tax (VAT) on economic growth (GDP) in Nigeria from 1994 – 2012. Relevant data were collected from Central Bank of Nigeria (CBN) statistical bulletin and Federal Inland Revenue Service (FIRS) reports. The Ordinary Least Square techniques were used to estimate three models in line with the formulated hypotheses. The results from the models revealed a strong positive significant impact of VAT on economic growth as proxy by GDP in Nigeria. It also revealed that there is positive relationship or impact of VAT on total tax revenue over the period studied. Consequently, it was recommended among other things that government should put in place measures to effectively utilize generated VAT revenue for infrastructural and economic development. It also recommends the review of tax incentives to attract both local and foreign investors in order to boost economic growth in Nigeria.
Value Added Tax (VAT) is a consumption tax that is being charged and embraced by many developed and developing countries, which is relatively easy to administer and very difficult to evade. The economic development and growth of any nation depends on government ability to generate adequate revenue in order to effectively provide various infrastructural facilities to satisfy the needs of the population and takes its position among the nations in the global village. The global oil glut has adversely affected the revenue position of Nigeria. The over 60% drop in oil price to below $40per barrel was unanticipated by the government. This has resulted to over 80% fall in the yield(spread) per barrel of oil produced in Nigeria, steep decline in the country's revenue,2016 budget deficit of over N2trillion,continuing devaluation of the Naira, slowing Gross Domestic Product(GDP) growth, reduced inflow of foreign direct investment, rising inflation and growing unemployment. The government at the federal level has put a stop on capital projects, while allocation to the states of the federation has reduced resulting in the inability of many states provide relevant infrastructural facilities and pay workers' salaries ranging from five months to eight months. It is therefore very clear that there is the need to diversify the revenue base of the nation, and Value Added Tax (VAT) is a major revenue source of advanced nations of the world, which much attention is not focused on this area by the federal government of Nigeria. The main focus of this work was to evaluate the impact of VAT on Nigerian economy between its introduction to date to discover the imperativeness of its reform. Ex-post-factor, descriptive and analytical research approach were adopted for the work. Data of VAT and GDP were obtained from 1994-2015, and analyzed to determine the relationship that has been existing between them. It was discovered that VAT has a positive relationship with GDP. The coefficient of the model indicate that a 1% increase in VAT will lead to a 0.88% increase in GDP. This shows a perfect positive correlation between VAT and GDP.It therefore becomes imperative for a reform in VAT.In conclusion,VAT is due for a total reform in rate and clear definition of exempted goods and services.We recommend that the curent 5% should be review upward to a minimum of 10%,Integrated Tax Offices should be stenghtened to increase efficiency and effectiveness,Federal Inland Revenue Service should address tax evasion,government should use VAT revenue judiciously to encourage tax payers and government should clearly define excempted goods and services so as to charge vatable goods that are currently not vatable.
VALUE ADDED TAX AND ECONOMIC GROWTH IN NIGERIA 2004-2018
American Journal of Multidisciplinary Research & Development (AJMRD) , 2021
The purpose of this paper is to investigate relationship between Value Added Tax(VAT) and economic growth in Nigeria from 2004 to 2018. Secondary data obtained fromboth Central Bank of Nigeria statistical bulletin and National Bureau of Statistics (NBS) wereused for the study, while regression analysis was used to analyze the data obtained. Theresults showed a positive and significant relationship between value added tax and economicgrowth in Nigeria. The study recommends that value added tax (VAT) should be sustainedand all identified loopholes should be covered for VAT revenue to continue to contributemore significantly to economic growth in Nigeria.
Value Added Tax and Economic Growth in Nigeria: A Comparative Analysis with Some Emerging Economies
This study examines the impact of Value Added Tax on the economic growth of Nigeria from 1994 to 2012 in comparison with other emerging economies. Economic growth is measured by growth in total government revenue and in GDP of the country. To achieve the objective of the study, historical secondary data relating to Value Added Tax Revenue, Gross Domestic Product and Total Government Revenue were collected from the Central Bank of Nigeria (CBN) Statistical Bulletin, Nigerian Bureau of Statistics (NBS), journals and the Internet. Trends were established in the rate of growth of value added tax as a percentage of gross domestic product and total government revenue; Pearson Moment Correlation Coefficient as well as the student‘t’ statistic were used to analyze the data. Nigeria’s VAT/GDP rate and VAT rates were compared with those of other emerging economies of the world. Results from the tests show that value added tax has a significant positive statistical relationship with the two independent variables in Nigeria over the period under review. The results also show Nigeria has the least VAT/GDP rate and VAT rate among emerging economies. On the basis of the findings, the study concludes that Value Added Tax improves the revenue base of the government and gross domestic product of the country for economic growth and development. The paper recommends that government should review the VAT rate to between 10 and 12.5%, strengthen the collection machinery and review the VAT Act to make the system all inclusive and more effective. Keywords: Value Added Tax, Gross Domestic Product, Revenue, Economy, Economic Development, Nigeria.
Value Added Tax and Nigeria's Economic Growth (2000-2020
Journal of Production,Operations Management and Economics, 2022
The study investigated value added tax and Nigeria's economy growth. Exposfactor research design was employed in the investigation. The study used secondary data sources from the Nigerian Central Bank and the World Bank's twenty-one (21) years' annual financial reports, which covered the years, 2000-2020. Regression analysis was used for the analysis. With the use of SPSS version 25, this study employed estimated techniques for both descriptive statistics and the Ordinary Least Square (OLS) regression analysis method. The results demonstrated a statistically positive significant association between value added tax (VAT) and Nigeria's GDP as well as a statically positive insignificant relationship between VAT and Nigeria's GNP. Finally, the analysis found a significant correlation between Nigeria's economic growth and value added tax. To increase Nigeria's gross domestic product, the study suggested imposing VAT on the items and services used by both low-and high-income consumers. The government should implement disciplinary procedures to punish officials who engage in corrupt practices in collecting and remittance of revenues.
Analyzing the Impact of Value Added Tax (VAT) on Economic Growth in Nigeria
Mathematical Theory and Modeling, 2013
This study investigates the relative impact of value added tax on economic growth in Nigeria. We used Johansen cointegration test. The result of cointegration test does not provide any evidence of long-run equilibrium relationship among the variables. An unrestricted vector autoregressions (VARs) technique were employed to analyze and draw policy inferences. Impulse response functions (IRFs) and Forecast error Variance decompositions (FEVDs) were compute through 1000 Monte Carlo simulations. The results derived from the impulse response function (IRF) and forecast error variance decomposition (FEVD) imply that value added tax have positive impact on economic growth in Nigeria , where variation in this variables growth rate will causes variation in real economic activity with about 50 percent in the near future. We conclude that the policy makers in Nigeria should continues this fiscal policy with other macroeconomic indicators. Per suing this policy will enhance the Nigerian economy positively, more specifically in this time of economic crisis in the world.
Value Added Tax and Economic Growth In Nigeria
Value added tax (VAT) is a consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service. The administration of VAT is relatively easy, unselective and difficult to evade. The study investigated the impact of value added tax on the economic growth of Nigeria. Ordinary Least Square technique was employed to test the hypotheses formulated. The result shows that VAT contributes significantly to the total tax revenue of government and by extension the economic growth of Nigeria. VAT revenue growth had consistent increase though it was not that explosive. To boost tax revenue we need to boost revenue collected from VAT. This can be achieved not necessarily by increasing the VAT rate of 5% percent but by closing every VAT revenue leakage, sensitizing the managers of companies operating in Nigeria on the need to remit the VAT revenue collection and proper training of the Federal Inland Revenue staff in charge of VAT revenue collection.
Value Added Tax Revenue and Economic Growth in Nigeria
The study examined value added tax (VAT) revenue and economic growth in Nigeria from 1994-2018. The specific objective of this study is to investigate how VAT revenue affects economic growth in Nigeria. Secondary data used for the study covered the period of 1994 to 2018 and sourced from CBN statistical Bulletin. The methods of Augmented Dickey Fuller (ADF) unit root test and Ordinary Least Square (OLS) regression was employed to analyze the data. The ADF test showed that both the dependent and independent variables were stationary at first difference. The OLS results showed that the R 2 is 95%, thus the model is a good fit. Also, VAT revenue has positive relationship with economic growth. It was evident from the results that a unit increase in VAT revenue increased economic growth by 3.30067%. Based on these finding, the study recommended amongst others that all identified administrative loopholes should be plugged for VAT revenue to contribute significantly to economic growth in Nigeria.