How productive is Value Added Tax Revenue in Nigeria between 1994 and 2016?
Journal Title: IOSR Journal of Economics and Finance (IOSR-JEF) - Year 2019, Vol 10, Issue 1
Abstract
Value added tax (VAT) is most common indirect tax, a consumption tax designed to increase tax revenue of government. The government will be in position to execute her laudable projects for well-being of the citizenry. The VAT was introduced in Nigeria in 1994. Available data showed that VAT revenue to the government from 2010, 2011, 2012, 2013, 2014, 2015, and 2016 were ₦564,890 million, ₦659,160 million, ₦802, 700million, ₦802,700, ₦803, 000 million, ₦767, 300, and ₦ 828,200 million respectively. It seems growing, but definitely not in tandem with expected economic reality in Nigeria, especially if purchasing power is considered. The questions are: How has the VAT helped in minimizing Nigerian government borrowing? Can be concluded at 5% Vatable rate in Nigeria that VAT revenue is productive? This work therefore assessedVAT productivity at the cross-elasticity of Total Consumption Expenditure in Nigeria; and VAT productivity at the cross-elasticity of Private Consumption Expenditure. The work hypothesized that: VAT productivity is not significant at the cross-elasticity of Total Consumption Expenditure in Nigeria. VAT productivity is not significant at the cross-elasticity of Private Consumption Expenditure in Nigeria.The study adopted the ex post facto research method using regression techniques. Data were sourced from Federal Inland Revenue Services (FIRS), Central Bank of Nigeria (CBN) statistical bulletin and World Bank’s World Development Indicators (WDI). The findings showed thatVAT productivity is not significant at the cross-elasticity of Total Consumption Expenditure (TCE)/GDP; and VAT productivity is not significant at the cross-elasticity of Private Consumption Expenditure (TCE*)/VATable GDP. Thus, rather than increasing VAT rate, which had not been properly harnessed, the machinery of VAT collection should be streamlined to minimize loopholes and corrupt practices. The distortion, lopsidedness and the directionless of VAT administrators may not be unconnected to political sabotage and ineptitude of economic managers of the nation. There is seemingly manifestation of over reliance on oil revenue for selfish personal and sectional interests.
Authors and Affiliations
Okonkwo Ikeotuonye Victor, Afolayan Segun Matthew
Keywords
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