Value Added Tax And Infrastructural Development In Nigeria

This study examined empirically, the impact of Value Added Tax (VAT) on infrastructural development in Nigeria. This study adopts ex post facto research design. Secondary data was retrieved from the Central Bank of Nigeria (CBN) statistical bulletin, Federal Inland Revenue Service (FIRS) and National Bureau of Statistics for various years were used for the study. The data covered the period between 1994 - 2017. This study employed Autoregressive Distributed Lag (ARDL) model approach to co-integration. It was found that VAT is generally not characterized with threatening oscillations year-onyear over the period. This is a good sign for policy makers as it implies that over the business cycle, VAT revenue will still maintain some considerable stability and hence it can be depended upon in the forecasting, budget planning and fiscal coordination. Though VAT growth rates have been meshed with a lot of oscillations and this may be expected due to the efficiency and monitoring levels of tax management authorities and the several loop-holes associated with the remittance of VAT revenue. The coefficient and p-values for VAT; 0.5232 {0.000}, reveals that VAT has a positive and statistically significant impact on at 5% level. The result suggests that an increase in VAT has a positive impact on infrastructural development in Nigeria and with a 1% rise in VAT resulting in a 5.232% increase in infrastructural development. The study recommends that the government and tax authorities should consider the VAT- consumption based models in ensuring revenue stability. Also, there are enormous inefficiencies with regards to the way and manner infrastructural development is carried out in Nigeria. The issues of late and slow budget implementation must be addressed alongside effective budget monitoring and evaluation.