Journal of
Accounting and Taxation

  • Abbreviation: J. Account. Taxation
  • Language: English
  • ISSN: 2141-6664
  • DOI: 10.5897/JAT
  • Start Year: 2009
  • Published Articles: 113

Full Length Research Paper

Evaluating the impact of value added tax on the economic growth of Nigeria

Nasiru Mukhtar Gatawa
  • Nasiru Mukhtar Gatawa
  • Department of Economics, Usmanu Danfodiyo University, Sokoto, Nigeria.
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Haruna Mohammed Aliero*
  • Haruna Mohammed Aliero*
  • Department of Economics, Usmanu Danfodiyo University, Sokoto, Nigeria.
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Abdullahi Muhammad Aishatu
  • Abdullahi Muhammad Aishatu
  • Department of General Studies, Federal Polytechnic Bida Niger State, Nigeria.
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  •  Received: 26 June 2016
  •  Accepted: 19 September 2016
  •  Published: 30 November 2016


The Nigerian tax reform in the early 1990s was a fallout of market reform in the mid- 1980s, while the structural adjustment program (SAP) piloted a transition to market driven economy where emphasis is laid on market forces with minimal government intervention, hence, the introduction of Value Added Tax (VAT) in 1994. This study empirically examined the impact of VAT on the level of economic activities in Nigeria from its inception to 2014. The study uses secondary data which was analyzed using Johansen (1988) co-integration test. The quarterly data ranged from 1994 Q4 to 2014 Q4. The study found evidence of a significant positive impact of VAT on economic growth. In the same vein, other government revenues, which include all oil receipts and other receipts into the federation account other than VAT were also found to be positively related to economic growth during the study period. The study, therefore, recommends that VAT should be sustained hence; all identified administrative loopholes should be covered for VAT revenue to continue to contribute more significantly to economic growth of the country. There should also be accountability and transparency in the management of all sources of government revenue.

Key words: Value added tax, economic growth, Gross Domestic Product (GDP), other government revenue, Nigeria.