ABSTRACT

Value  Added  Tax  (VAT)  was  introduced  by the  Federal   Government  of Nigeria  in  1993   to replace Sales Tax.  The aim was to ·   increase  the revenue  base of government  and make funds available for developmental  purposes that will accelerate  economic growth.  Time series data on the  Gross Domestic  Product  (GDP),   VAT  Revenue,  Total  Tax  Revenue  and  Total   (Federal Government) }3-evenue  from  2000 to 2012 sourced from Central Bank  of Nigeria   (CBN) were analyzed,   using  both  simple  regression  analysis   and  descriptive   .  statistical    method.  Findings showed  that  Gross Domestic  Product  and Value Added  Tax  exhibited   a positive.   trend  in  its growth  within the period  under review.   GDP decelerated  (i.e decrease  in·  rate  or decrease  in speed)  in  growth  trend  within  the  period under  investigation    while  value  added  tax  revenue · stagnated  (i.e.   sameness  in rate  or sameness  in  speed)  in  the growth  trend  within  the period (2000-2012).   The average growth in  GDP and VAT revenue·  within   the reference period  was the same. The contribution   of VAT revenue to total  federally   collected  revenue was low.  There is causality between GDP and VAT revenue within the period  under review.   There  is  a lag period of two   years.   VAT  revenue  negatively  influenced .econornic   growth  in  Nigeria   within   the reference period.  This  paper therefore  recommends ·  that all  identified   administrative   loopholes should  be plugged for VAT Revenue  to continue to contribute more significantly  to economic growth of the country.  This  should be done on the realization  that any action  taken on either VAT Revenue or the GDP will take two years to become effective.

TABLE OF CONTENTS

Title Page

Declaration

Certification

Dedication

Acknowledgements v

Table of Contents

List of tables ix

Abstract

CHAPTER  ONE

1.0 Introduction 1

1.1     Background of the study 1

1.2 Statement of the problem 4

1.3  Research questions 4

•1.4 Objective  of the study 5

1.5 Research  hypotheses 5

1.6  Significance of the study: 6

1.7 Scope of the study 6

1.8  Limitations  of the study : 7

CHAPTER TWO

2.0 Review of related literature 8

2.1  Value added tax  : 8

2.2 Conceptual Frame Work 10

2.3  Vat as a replacement  for sale tax 11

2.4Modified  value  added tax (MVAT) 12

2.5 Modified  value added tax committee (MVATC) 13

2.6 Commencement of modified value added tax (MVAT) 14 ·    

2.8 Scope of value added tax (VAT) 17

2.9  Types and methods of calculating vat 18·

2.10  Methods of calculating vat 19

2.11   Accounting for vat (records and accounts) 19

2.12  Advantages and disadvantages of vat 20

2.13   Disadvantages/problems  of vat 21

2.14 Factors militating  against vat administration  in Nigeria 23

2.15   Review  of empirical  literature  on vat  :                                                                                                                                                                 24

CHAPTER  THREE

3.0 Methodology                                                                                                                   30

3.1  Area of study                                                                                                                  30

3 .2  Method of data collection                                                                                               30

3.3   Method of data analysis  and model  specification                                                          30

CHAPTER FOUR

4.0     Results and discussion:                                                                                                 34

4.1  Trend in Growth Rate of Real Gross Domestic Product and Value  Added Tax in Nigeria                                                                     34

4.1.1   Growth of the value  of real gross domestic product and value  added tax in Nigeria                                                                         34

4.1.2    Compound growth rate in real gross domestic product and value added tax          35

4.1.3   Investigation  acceleration,   deceleration  or stagnation  in real gross domestic  product and value added tax :

4 .1  A Comparison  of the growth rate between VAT revenue, total  tax revenue and GDP revenue   :

4.1.5   Contribution ofV AT revenue to total tax revenue in Nigeria

4.1.6   Direction  of causality between VAT revenue and GDP revenue

4.1.7 Impact of value  added tax on economic growth in Nigeria

  CHAPTER FIVE

5.0     Summary   of findings.    conclusion    and  recommendations                                                   46

5 .1  Summary  of findings                                                                                                                                     46

5.2   Conclusion                                                                                                                                   48

5 .3  Recommendations                                                                                                                       48

References

Appendix