IDEAS home Printed from https://ideas.repec.org/a/bfv/journl/030.html
   My bibliography  Save this article

Empirical Analysis of Value Added Tax on Economic Growth in Nigeria (1994-2018)

Author

Listed:
  • John Ayodele Ajayi

    (Department of Finance, Faculty of Management Sciences, University of Lagos-Akoka, Nigeria)

  • Rotimi Sopelu

    (Department of Finance, Faculty of Management Sciences, University of Lagos-Akoka, Nigeria)

Abstract

This study examined the effect of Value Added Tax (VAT) on economic growth in Nigeria from 1994 to 2018. Secondary data, used for the study as relevant data on Value Added Tax Revenue, Total Revenue, Total Expenditure and Gross Domestic Product at current basic prices, were collected from the Central Bank of Nigeria statistical bulletin of 2018. Auto-Regressive Distributed Lag (ARDL) technique was used to estimate a multiple linear regression model that was tailored in line with the formulated hypotheses. Results from the study showed that there is a positive and insignificant effect between log value of total revenue and log value of total of value added tax on log value of gross domestic product while total expenditure has a negative and insignificant effect on log value of gross domestic product. The general hypothesis testing using F statistics (0.023**) also revealed that VAT has made significant impact on economic growth in Nigeria which is proxied by gross domestic product since its inception in 1994. Consequently, it was recommended among other things that there should be stringent penalty imposed on any individual or corporate body that indulges in any form of value added tax malpractices, if the high correlation between value added tax and overall tax revenue in Nigeria should be maintained. It is also recommended that government through Federal Inland Revenue Service should create an effective and reliable database for every vat-able person in Nigeria in order to minimize the incidence of tax evasion.

Suggested Citation

  • John Ayodele Ajayi & Rotimi Sopelu, 2021. "Empirical Analysis of Value Added Tax on Economic Growth in Nigeria (1994-2018)," SBS Journal of Applied Business Research (SBS-JABR), SBS Swiss Business School, vol. 9, pages 4-16.
    • Handle: RePEc:bfv:journl:030
    as

    Download full text from publisher

    File URL: https://jabr.sbs.edu/vol9/SBS_JABR_Vol9_Art01.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Gareth Myles, 2000. "Taxation and economic growth," Fiscal Studies, Institute for Fiscal Studies, vol. 21(1), pages 141-168, March.
    2. 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.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. V. P. Vishnevsky & A. V. Matyushin & N. V. Stel’makhova, 2025. "Tax Regulation of Economic Growth in the Context of Post-Crisis Recovery: Problems and Prospects," Studies on Russian Economic Development, Springer, vol. 36(1), pages 66-76, February.
    2. Norman Gemmell & Joey Au, 2013. "Government size, fiscal policy and the level and growth of output: a review of recent evidence," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(2), pages 203-229.
    3. Chung Tin Fah, 2019. "Malaysia’s Tax Structure – Aligning Taxes to Higher Income Country," Eurasian Journal of Economics and Finance, Eurasian Publications, vol. 7(2), pages 42-58.
    4. Pavlina R. Tcherneva, 2008. "The Return of Fiscal Policy: Can the New Developments in the New Economic Consensus Be Reconciled with the Post-Keynesian View?," Economics Working Paper Archive wp_539, Levy Economics Institute.
    5. Xin Long & Robert Waldmann & Alessandra Pelloni, 2008. "Lump-Sum Taxes in a R&D Model," Working Paper series 35_08, Rimini Centre for Economic Analysis.
    6. Smedoiu Popoviciu Alexandra & Horobet Alexandra & Belascu Lucian, 2021. "Taxing the digital economy – rethinking Romania’s prospects," Proceedings of the International Conference on Business Excellence, Sciendo, vol. 15(1), pages 338-351, December.
    7. Takumah, Wisdom, 2014. "Tax Revenue and Economic Growth in Ghana: A Cointegration Approach," MPRA Paper 58532, University Library of Munich, Germany.
    8. Yaya KEHO, 2011. "Tax Structure and Economic Growth in Cote dIvoire: Are Some Taxes Better Than Others?," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 1(4), pages 226-235, December.
    9. Shapir-Tidhar, Michal H. & Malul, Miki & Rosenboim, Mosi, 2023. "Tax structure efficiency: Introducing a new index," Structural Change and Economic Dynamics, Elsevier, vol. 65(C), pages 430-437.
    10. Gheorghița DINCĂ & Marius Sorin DINCĂ & Bardhyl DAUTI & Mirela Camelia BABA & Cătălina POPIONE, 2020. "Cyclicality of Fiscal Policy in the European Union," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(1), pages 75-96, March.
    11. John Creedy & Norman Gemmell, 2005. "Publicly financed education in an endogenous growth model," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 32(2), pages 114-131, April.
    12. Kashif Munir & Maryam Sultan, 2018. "Are some taxes better for growth in Pakistan? A time series analysis," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 45(10), pages 1439-1452, August.
    13. Gemmell Norman & Au Joey, 2013. "Do Smaller Governments Raise the Level or Growth of Output? A Review of Recent Evidence," Review of Economics, De Gruyter, vol. 64(2), pages 85-116, August.
    14. Peter Nijkamp & Jacques Poot, Victoria, 2002. "Meta-Analysis of the Impact of Fiscal Policies on Long-Run Growth," Tinbergen Institute Discussion Papers 02-028/3, Tinbergen Institute, revised 23 Apr 2003.
    15. Majid Sameti & Leila Rafie, 2010. "Interaction of Income Distribution, Taxes and Economic Growth (The Case of Iran and Some Selected East Asian Countries)," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 15(1), pages 67-81, winter.
    16. Simone Salotti & Carmine Trecroci, 2016. "The Impact of Government Debt, Expenditure and Taxes on Aggregate Investment and Productivity Growth," Economica, London School of Economics and Political Science, vol. 83(330), pages 356-384, April.
    17. Kim, Junghun, 2005. "Tax reform issues in Korea," Journal of Asian Economics, Elsevier, vol. 16(6), pages 973-992, December.
    18. Norman Gemmell & Joey Au, 2013. "Government size, fiscal policy and the level and growth of output: a review of recent evidence," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 18(2), pages 203-229.
    19. Nicholas Apergis, 2015. "Labor Income Tax and Output in a Panel of Central and Eastern European Countries: A Long-Run Perspective," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(1), pages 1-12, March.
    20. Halit Yanikkaya & Taner Turan, 2020. "Tax Structure And Economic Growth: Do Differences In Income Level And Government Effectiveness Matter?," The Singapore Economic Review (SER), World Scientific Publishing Co. Pte. Ltd., vol. 65(01), pages 217-237, March.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bfv:journl:030. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Milos Petkovic, Ph.D (email available below). General contact details of provider: https://edirc.repec.org/data/sbsklch.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.