Value -Added Tax and Nigeria Economic Growth

ABSTRACT

Value-added tax (VAT) is a consumption tax that is widely used by many countries as a means of generating revenue for the government. The objective of this study is to examine the relationship between value-added tax and economic growth in Nigeria. This study begins by providing an overview of VAT in Nigeria and its role in the country’s economy. It then discusses the theoretical underpinnings of the relationship between VAT and economic growth and reviews the existing literature on the topic, and analyses were carried out in measuring the Nigerian economy, proxies by gross domestic product, and gross national product for the period of 2015 to 2021. Secondary data method was adopted in obtaining data on value-added tax, gross domestic product and gross national product. These data were obtained from CBN statistical bulletin and were analyzed using the ordinary least squares method as a statistical tool (OLS). From the analysis, it was obtained that value-added tax has a significant relationship with the gross domestic product and gross national product. The implication of these findings is that the Nigerian economy will experience growth if the collection of the value-added tax will be improved. Based on these findings the study recommends that government should properly use revenue generated from value-added tax and formulate policies that will help boost the collection of value-added tax.