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The Effect of Value-Added Tax on Economic Growth of Nigeria

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Listed:
  • Orisadare, Monica Adele
  • Fasoye, Kazeem

Abstract

The paper examined the effect of VAT on economic growth in Nigeria between 1994 and 2020 using consumer price index (CPI) as a threshold. A technique of Threshold Vector Autoregressive (TVAR) was employed and the results reveal that a VAT above the 10 percent threshold value endangers the economy while a VAT below the 7.59 percent threshold value does not harm the economy; rather, it improves people's well-being. It is therefore recommended that Nigerian economy should maintain the lower VAT threshold to cushion the effect of ever rising CPI on the citizens.

Suggested Citation

  • Orisadare, Monica Adele & Fasoye, Kazeem, 2021. "The Effect of Value-Added Tax on Economic Growth of Nigeria," African Journal of Economic Review, African Journal of Economic Review, vol. 10(1), December.
    • Handle: RePEc:ags:afjecr:320572
    DOI: 10.22004/ag.econ.320572
    as

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    References listed on IDEAS

    as
    1. M. Hashem Pesaran & Yongcheol Shin & Richard J. Smith, 2001. "Bounds testing approaches to the analysis of level relationships," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 16(3), pages 289-326.
    2. Keen, Michael & Lockwood, Ben, 2010. "The value added tax: Its causes and consequences," Journal of Development Economics, Elsevier, vol. 92(2), pages 138-151, July.
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