VALUE ADDED TAX (VAT) AND ECONOMIC GROWTH IN NIGERIA

VALUE ADDED TAX (VAT) AND ECONOMIC GROWTH IN NIGERIA

ABSTRACT
This research work examines Vat and economic growth in Nigeria. The research design uses descriptive and survey method of data collection. The population of the study was made of 100 manager and junior staff of the Rivers State ministry of finance. The Taro Yemen’s formula was used to determine the sample size of 80. A self-designed questionnaire was administered to the sample size for the collection of data from the respondents in Rivers State ministry of finance. The simple percentage was used to analyze the research question and Pearson moment product correlation was used to test hypothesis. Findings revealed that VAT is a reliable source of Government revenue in Nigeria, VAT contributes to tax revenue extension of the economic growth, VAT controls the behaviour of producer and consumer, VAT eliminates badly administered taxes and VAT serve as a source of yielding revenue to the Government and It also revealed that VAT revenue has effect on Tax revenue. Based on the above findings, possible recommendations were made that Government should intensify effort in organizing seminars and workshops to educate viable organizations and individuals on the need for prompt payment of VAT, there should be provision for enforcing penalties and additional assessment on erring viable persons, there should be efficient enumeration system for business in each local government and state to reduce evasion’ simple languages should be used to explain VAT laws to viable persons as it will help to enhance compliance and reduce cost and Government should increase VAT rate as it will help to generate more revenue for the government.

CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Value added tax (VAT) is a consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service. The administration of VAT is relatively easy, unselective and diicult
to evade. Countries all over the world, look for ways to boost their revenue, this facilitated many nations to introduce value added tax on goods and services. For instance, in Africa, VAT has been introduced in
Benin Republic, Cote d’Ivore, Guinea, Kenya, Madagascar, Mauritius, Senegal, Togo, Nigeria. Evidence suggests that in these countries VAT has become an important contributor to government revenue (Ajakaiye, 2000; Shalizi and Square, 1988; Adereti, Adesina and Sanni, 2011). Nigeria introduced VAT in 1993; however, its full implementation began on 1st January, 1994. This has attracted the attention of researchers and
academia on its benefit in the economic growth of Nigeria. Economic growth as measured the increase in the national income or total volume of production of goods and services of a country accompanied by improvements in the total standard of living of the people (Chinwuba and Amos 2011 as cited in Ihendinihu and Onwuchekwa, 2012).

VALUE ADDED TAX (VAT) AND ECONOMIC GROWTH IN NIGERIA