VALUE ADDED TAX ADMINISTRATION AND ECONOMIC GROWTH IN NIGERIA

The administration of VAT in Nigeria is poised towards enhancing government revenue generation for growth stimulation by providing for infrastructural development; however, the economy is facing deterioration and closure of local businesses on whose products, the VAT is imposed. This necessitated the study to examine the impact of value added tax on economic growth in Nigeria from 1999 to 2019. The Auto-Regressive Distributed Lag (ARDL) model were employed using time series data. The result of the analysis in the short run, shows that VAT has a negative and significant effect on economic growth whereas in the long run, the effect was positive but insignificant on economic growth. Inflation also has a significantly positive effect, whereas interest rate has a significantly negative effect on economic growth in the long run. The study concludes that in the long run, a positive relationship exist between value added tax and economic growth in Nigeria. Hence, the Nigerian government should implement policies geared towards ensuring a stable and sustainable value added tax rate and administration through accountability, transparency and blockages of leakages in the system in order to thrive the nation’s economy and bring about improvement in government revenue, thereby leading to infrastructural development in the country and ultimate growth in the economy.