Comparative Analysis Of The Effect Of Value Added Tax (Vax) On Economic Growth: Empirical Study Of Nigeria And Ghana 2003 – 2016

ABSTRACT

There has been an argument on whether to increase the VAT rate or VAT base in countries. To

ascertain this, this study compared the impact of value added tax on the economic growth of

Nigeria and Ghana. The ex-post facto research design was adopted for the study and data were

collected from Federal Inland Revenue Services (FIRS) and Central Bank of Nigeria (CBN)

Statistical Bulletin; and Statistical Bulletin of Ghana Central Bank for the period 2003-2016.

Economic growth was proxied by real GDP while VAT was measured by VAT revenues in the two

countries under review. For comparative purposes, the local currencies of the countries under

review were used. The study employed Ordinary Least Square (OLS) regression method. The

regression results revealed that value added tax (VAT) has a positive and significant effect on

economic growth in Nigeria and Ghana but its impact in Nigeria's economic growth was higher

when compared to Ghana's. It was recommended that Nigeria should increase her VAT rate

while Ghana should increase her VA[ base.