IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH (IJSSMR )

E-ISSN 2545-5303
P-ISSN 2695-2203
VOL. 2 NO. 1 2016

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Assessment of the Contribution of Value Added Tax to the Nigerian Economy

Manukaji Ijeoma Juliana and Nwadialor Eugene Okoye

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Abstract

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 performance of VAT as a source of revenue in Nigeria is encouraging, but it remains difficult to systematically assess the impact on VAT on the economy. 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. This paper analyzed empirically the impact of Value Added Tax (VAT) on economic growth in Nigeria from 2005-2014. Data were collected from Central Bank of Nigeria (CBN) statistical bulletin. A simple regression technique, with the aid of SPSS version 23.0, was employed to test the hypotheses formulated. The result shows that VAT positively contributes to the total revenue generated by government and by extension the economic growth of Nigeria. Therefore, this study recommends that revenue collected from VAT needed to be boosted. 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.

Assessment, contribution, value added tax, economy

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