ECONOMIC GROWTH AND THE EFFECT OF VALUE ADDED TAX IN NIGERIA: A CRITICAL REVIEW

Abstract

This study examined the contribution of value added tax to economic growth in Nigeria from 1994 to 2021 with the objective to ascertain the influence of value add tax on economic growth in Nigeria. Secondary data was obtained from the Central Bank of Nigeria statistical bulletin and the Federal Inland Revenue Service annual reports for the various years within the period under review. To measure the data collected, a multiple linear model was built to capture the contributions of value added tax to real gross domestic product. The data generated was analysed using Descriptive tests, Diagnostic tests and Ordinary Least Square Regression test. The vector error correction model was used to smoothen out fluctuations in the relationship between the dependent and independent variables while the T-test, F-test, coefficient of multiple determinations (R-squared) and autocorrelation test were used to evaluate the robustness of the regression results. The findings from the study revealed that value added tax had positive and significant effect in measuring real gross domestic product meaning its contributions to federally collected revenue has significant effect on economic growth in Nigeria. Keywords: value added tax, gross domestic product, real gross domestic product, economic growth.