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Value Added Tax and Economic Development: Focus on Human Capital Development

Author

Listed:
  • Kuyebi Favour Orejesuoluwapo

    (Department of Accounting, College of Management and Social Sciences, Covenant University Ota, Ogun State, Nigeria)

  • Omodero Cordelia Onyinyechi

    (Department of Accounting, College of Management and Social Sciences, Covenant University Ota, Ogun State, Nigeria)

Abstract

This study investigates the impact of Value Added Tax on Economic Development and Human Capital Development from 1994 to 2022. Employing a longitudinal research design, the study utilizes data specific to Nigeria and obtained from the office of the Federal Inland Revenue Service (FIRS), the Statistical Bulletin of the Central Bank of Nigeria (CBN), and the World Bank. The collected data is then analyzed using the Johansen Co-integration, Vector Error Correction Model, and Vector Autoregressive analysis technique. The research establishes a connection between Value Added Tax (VAT) and the Exchange rate, demonstrating their impact on Economic Development and Human capital development in Nigeria. The verdicts show that both VAT and Exchange Rate significantly impact both Economic Development and Human Capital Development, though negatively. However, these findings are not meant to discourage but rather to serve as a catalyst for change. The recommendations outlined in the study emphasize the importance of training, oversight, exchange rate stabilization, investment in education, and financial security in promoting Economic Development and Human Capital Development in Nigeria. Tax regulatory authorities should improve management of VAT funds to ensure they are utilized for developmental objectives. Finally, organizations such as the EFCC must remain steadfast in their commitment to preventing the misuse or diversion of VAT funds meant for Capital Expenditure and the development of the nation’s human resources, thereby safeguarding the financial security of the government and the nation as a whole.

Suggested Citation

  • Kuyebi Favour Orejesuoluwapo & Omodero Cordelia Onyinyechi, 2025. "Value Added Tax and Economic Development: Focus on Human Capital Development," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 35(1), pages 49-82.
    • Handle: RePEc:vrs:suvges:v:35:y:2025:i:1:p:49-82:n:1003
    DOI: 10.2478/sues-2025-0003
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    References listed on IDEAS

    as
    1. Cordelia Onyinyechi Omodero & Sylvester Eriabie, 2022. "Valued added taxation and industrial sector productivity: a granger causality approach," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2126120-212, December.
    2. Adegbie, Folajimi Festus & Jayeoba Olajumoke & Kwabai Jerry Danjuma, 2016. "Assessment of Value Added Tax on the Growth and Development of Nigeria Economy: Imperative for Reform," Accounting and Finance Research, Sciedu Press, vol. 5(4), pages 163-163, November.
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      More about this item

      Keywords

      Value Added Tax; Economic Development; Human Capital Development; Exchange rate; Sustainability;
      All these keywords.

      JEL classification:

      • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
      • I25 - Health, Education, and Welfare - - Education - - - Education and Economic Development
      • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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