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Value Added Tax and Economic Growth in Nigeria (1994 – 2017)

Author

Listed:
  • Rasaki O. KAREEM

    (Department of Economics and Actuarial Sciences, College of Arts, Social and Management Sciences, Crescent University, Abeokuta, Ogun State, Nigeria)

  • Rukayat A. ARIJE

    (Department of Economics and Actuarial Sciences, College of Arts, Social and Management Sciences, Crescent University, Abeokuta, Ogun State, Nigeria)

  • Yusuf H. Avovome

    (Department of Economics, Federal College of Education, Osiele, Abeokuta, Ogun State, Nigeria)

Abstract

The study investigates Value Added Tax (VAT) and Economic Growth in Nigeria. The objectives of the study are to examine the impact of value added tax and economic growth and to determine the causal relationship between value added tax and economic growth in Nigeria. Secondary data sourced from Central Bank of Nigeria Statistical Bulletin was used for the study. The data properties were tested for unit root using Augmented Dickey-Fuller, Bound test co-integration was used to test for the long run relationship between the variables. The result revealed that value-added tax positively and significantly impacted on economic growth of Nigeria both in the long-run and short-run. The causality test also indicated that there was a causal relationship between Value Added Tax and economic growth in Nigeria during the period under study. The study therefore recommended that government should increase the VAT rate and eliminate every VAT revenue leakage since it was found to have positive effect on economic growth in Nigeria.

Suggested Citation

  • Rasaki O. KAREEM & Rukayat A. ARIJE & Yusuf H. Avovome, 2020. "Value Added Tax and Economic Growth in Nigeria (1994 – 2017)," Business & Management Compass, University of Economics Varna, issue 2, pages 137-152.
    • Handle: RePEc:vrn:journl:y:2020:i:2:p:137-152
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    More about this item

    Keywords

    Value Added Tax; Augmented Dickey Fuller (ADF); Bound Test; Economic Growth; Nigeria;
    All these keywords.

    JEL classification:

    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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