VALUE ADDED TAX ON THE NIGERIAN ECONOMIC GROWTH INDICES

To explore the relationship between taxation policy and economic growth, this study delved into the impact of value-added tax (VAT) on Nigeria’s economic growth indicators. The research adopted an expost facto design, utilizing data sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin (2022) for 21 years spanning from 2002 to 2022. Analytical techniques employed included descriptive analysis, the Augmented Dickey-Fuller (ADF) test for unit root, and the ordinary least squares (OLS) regression model. Findings revealed that the standard VAT rate exerts a significant positive effect on Nigeria’s gross domestic product (GDP), while the reduced VAT rate shows an insignificant positive effect on GDP. The study recommends that the government capitalize on the favourable impact of the standard VAT rate by carefully adjusting tax policies to promote investment in the petroleum sector while maximizing revenue generation. Additionally, it suggests that the reduced VAT rate policy be reassessed to enhance its attractiveness for businesses to invest and create jobs, thus significantly strengthening the national economy.

1 01 Dec, 2024

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