Impact of Value Added Tax on Economic Growth and Revenue Generation in Nigeria

Impact of Value Added Tax on Economic Growth and Revenue Generation in Nigeria.

INTRODUCTION

Value added tax (VAT) is a consumption tax that is being charged and embraced by many developed and developing countries which is relatively easy to administer and very difficult to evade.

The economic development and growth of any nation depends on the government’s ability to generate adequate revenue in order to effectively provide various infrastructural facilities to satisfy the needs of the population.

Chartered institute of taxation Nigeria (CITN) (2002) explained that the idea of introducing VAT in Nigeria came from the report of the study group set up by the federal government in 1991 to review the tax system in Nigeria, hence, VAT was proposed and a committee reviewed its implementation.

Value added Tax Act 1993 was passed and thereby repealed sales Tax Act of 1986.

According to Federal Inland Revenue Service FIRS (1995) as cited by Bassey (2013), value Added Tax is a consumption tax payable on the goods and services consumed by any person whether government agencies, business organizations or individuals.

The dynamic operating mechanism of VAT is very easy because the yield from VAT is an accurate measurement of the growth of an economy since purchasing power increases with economic growth.

REFERENCES

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Aderetis, S.A., Adesina, J.A., &Sanni, M.R. (2011). Value Added Tax and Economic Growth of Nigeria. European Journal of Humanities and Social Sciences, 10(1), 455-471.

Bassey, O.U. (2013). Company and Personal Income Tax of Nigeria, Lagos: chattered institute of Bankers Press, Lagos.

Bakare, A.S. (2013). Value Added Tax and output Growth in Nigeria.Proceeding of 8^th Annual London: Business Research conference, Imperial College, London. United Kingdom 8-9 July, 2013.

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