ABSTRACT

The study investigated the effect of value added tax on nigerian economic performance. It utilized time series data from 2000-2016 extracted from CBN statistical bulletin, National Bureau of Statistic and various reports of the Federal Inland Revenue Service. It extracted real gross domestic product, inflation rate and unemployment rate as proxies for economic performance while value added tax revenue was used as the independent variable. It adopted ex post facto research design to establish the relationship of the variables. The ordinary least squares method of simple regression technique was engaged to analyze the data. It was found that there is positive significant effect of value added tax revenue on economic growth of Nigeria. Value added tax revenue has significant effect on economic growth of Nigeria at less than 5% level of significance. It also established that there is no significant effect of value added tax revenue on inflation rate in the economy of Nigeria and that there is positive significant relationship between value added tax revenue and unemployment rate in Nigeria. The study found that the effect of value added tax revenue is significant on unemployment rate in Nigeria at 5% level of significance and therefore concluded that the is long run equilibrium relationship between value added tax and economic performance of Nigeria. The study therefore recommends that Government should engage the revenue collected from value added tax for specific programmes that would yield benefit for the economy so as to enhance its growth rate, Government should differentiate the value added tax rate of some consumables such as tobacco and alcohol by increasing the rate on the products and that they should provide the enabling business environment to enhance growth in the private sector to provide job opportunities.