Value Added Tax and Economic Growth in Nigeria (1994 – 2017)

The study investigates Value Added Tax (VAT) and Economic Growth in Nigeria. The objectives of the study are to examine the impact of value added tax and economic growth and to determine the causal relationship between value added tax and economic growth in Nigeria. Secondary data sourced from Central Bank of Nigeria Statistical Bulletin was used for the study. The data properties were tested for unit root using Augmented Dickey-Fuller, Bound test co-integration was used to test for the long run relationship between the variables. The result revealed that value-added tax positively and significantly impacted on economic growth of Nigeria both in the long-run and short-run. The causality test also indicated that there was a causal relationship between Value Added Tax and economic growth in Nigeria during the period under study. The study therefore recommended that government should increase the VAT rate and eliminate every VAT revenue leakage since it was found to have positive effect on economic growth in Nigeria.