Impact Of Value Added Tax On Economic Growth
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Value Added Tax (VAT) has become a major source of revenue in many developing countries like Nigeria. In sub Sahana Africa for example, VAT has been introduced in Benin Republic, Cote d‟Ivore, Guinea, Kenya, Madagascar, Mauritius, Niger Republic, Senegal, Togo. Evidence suggests that in these countries VAT has become an important contribution to total government tax revenue; (Ajakaiye 2000) the value Added Tax decree was established in 1993 and was imposed on 1994. Value Added Tax (VAT) in an ideal form of taxation in Nigeria tax system and has significantly contributed to resources mobilization as well as capital formation to the economy. It has positive and significant impact on revenue mobilization in Nigeria; it also has positive relationship with consumption.
VAT is a consumption tax that is relatively easy to administer and difficult to evade and it has been embraced
by many countries worldwide (Federal Inland Revenue Service 1993). Evidence so far supports the view that VAT revenue is already a significant source of revenue in Nigeria. For example, actual VAT revenue from 1994 was N8.189 billion which is 36.590 higher than the projected N6 billion for the year. Similarly, actual VAT revenue for 1995 was N21 billion compared with the projected N12 billion. In terms of contribution to total federally collected revenue, VAT accounted for about 4.06% in 1994 and 5.93% in 1995. As much as N404.5 billion was collected on VAT (5.1%) of total revenue in 2008.
VAT revenue is generated for distribution to the state and local government in Nigeria. Unlike the oil revenue whose market government has no control over. This helps to reduce over dependence on oil revenue, this assures a sustainable economic growth and development. While the performance of VAT as a source of revenue in Nigeria is encouraging, it means difficult to find attempts to systematically assess the impact on VAT on the economy.
Recent research work on the impact of taxation on the Nigeria economy impact up all the various taxes together without isolating VAT. How and in what direction VAT has be affecting the Nigeria economy? And the relationship of VAT on economic growth? Findings answers to these and other similar questions is the main trust of this paper.
1.2 STATEMENT OF THE PROBLEM
The attitude of Nigerians towards taxation is worrisome as many prefer not to pay tax if given the opportunity. The economy continues to lose hung amount of revenue through the unwholesome practice to tax avoidance and tax evasion this loss of revenue can change the fortune of many economies. Particularly, developing countries like Nigeria. This problem has been lingering for so long which urgent attention and solution is over due to the cost of collecting tax in Nigeria (both social and economic cost) is too high to the extent that if left unchecked the cost may soon outweigh the benefit or value derived from such operation and that will not the appropriate for the system. In Nigeria, VAT is
one of the instruments the federal government introduced to generate additional revenue. Yet, most prominent Nigerians and interest groups had spoken against its introduction. It would appear that VAT is froth with some problems. For the purpose of this paper work we shall examine the implication of VAT on revenue generation in Nigeria and how VAT affect the economic growth in Nigeria.
1.3 RESEARCH QUESTIONS
This research work is set to answer the research question below.
1. What is the impact of VAT on economic growth?
1.4 OBJECTIVE OF THE STUDY
The following are the objectives of the study:
1. To know the impact of value added tax on economic growth.
1.5 STATEMENT OF HYPOTHESIS
The following assumptions which are subject to testing are made for the purpose of this research work.
HO1: O1 VAT has no Impact on economic growth.
1.6 SIGNIFICANCE OF THE STUDY
The study will assist the government in policy formulation as it relates to value added tax. It will also help to broaden the nation‟s revenue base thereby making it less dependent on oil export.
Title Page
Approval Page
Dedication
Acknowledgement
Abstract
CHAPTER ONE:
1.0 INTRODUCTION
1.1 Background of the study
1.2 Statement of problem
1.3 Research Questions
1.4 Objectives of Hypothesis
1.5 Statement of Hypothesis
1.6 Significance of the study
CHAPTER TWO:
2.0 LITERATURE REVIEW
2.1 Theoretical Framework
2.2 Empirical Literature Review
CHAPTERTHREE:
3.0 RESEARCH METHODOLOGY
3.1 Research Methodology
3.2 Model Specification
3.3 Method of Evaluation
3.4 Justification of the Model
3.5 Transformation of the Data
3.6 Data Source
CHAPTER FOUR:
4.0 DATA PRESENTATION AND ANALYSIS
4.1 Presentation of Result
4.2 Interpretation of Result
4.3 Evaluation of Research Hypothesis
CHAPTER FIVE:
5.0 SUMMARY, POLICY RECOMMENDATION AND CONCLUSION
5.1 Summary of Findings
5.2 Policy Recommendation
5.3 Conclusion
Bibliography
Appendix
The Title Page should be the first section of your project “Impact Of Value Added Tax On Economic Growth”, providing essential details like the project title, your name, your supervisor’s name, the institution, and the submission date. After that, the Abstract offers a brief summary of your project, touching on its purpose, methods, results, and conclusions in 150-300 words. The Acknowledgments section is where you can thank those who supported your research, such as your supervisor, peers, or organizations that provided resources.
Next, the Table of Contents organizes the Impact Of Value Added Tax On Economic Growth by listing its chapters and sections, along with page numbers for easy reference. The List of Figures and List of Tables help guide readers to specific visual elements like graphs, charts, or tables included in the document. There should also be an Abbreviations and Glossary section to explain any specialized terms or acronyms, making the content clearer to readers unfamiliar with the technical language.
The main body of the Impact Of Value Added Tax On Economic Growth should start with the Introduction, which provides background information, outlines the research problem, states your objectives, and gives a brief overview of your research methods. Following that, the Literature Review offers an in-depth look at previous research relevant to your project, identifying gaps your study aims to address. The Methodology section then explains the research design, tools, and data collection methods you used to conduct the project and analyze the data.
In the Results and Discussion section, you present your findings and discuss them in relation to the Impact Of Value Added Tax On Economic Growth research questions or objectives, often using tables or charts to help explain the data. The Conclusion summarizes the key results, discusses their implications, and suggests possible directions for future research. You may also include recommendations based on your findings, offering practical advice for improvements or applications. Finally, the Impact Of Value Added Tax On Economic Growth project should include a References or Bibliography section to list all the sources you cited, as well as Appendices for any additional material. A Statement of Originality is often included to confirm the authenticity of your work