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This study assessed the effect of value-added tax (VAT) on Nigeria's economic performance, spanning the years 1994 to 2023. Utilising secondary data obtained from the Central Bank of Nigeria bulletin, 2023, the study employed an ex post facto design. VAT and federal government revenue are considered independent variables of the dependent variable, gross domestic product (GDP). To verify the formulated hypotheses, the Ordinary Least Squares estimation was employed. According to the findings, VAT has a substantial and positive implication on Nigeria's GDP according to the study's findings. Additionally, government revenues have a substantial negative effect on Nigeria's GDP. The coefficient of determination suggests that changes in the value-added tax variables account for approximately 72% of the observed variations. The study found that VAT has made a substantial contribution to the Nigerian economy's expansion and progress. Hence, the study advises that the government and tax and revenue agencies should implement proactive measures and procedures to oversee the flow of taxes and revenues received by the nation, as well as ensure the efficient distribution of revenues among different economic sectors. An expansion of VAT bases is necessary to incorporate the informal sector into the VAT system, thereby potentially deterring evasion. This will empower the government to generate sufficient revenue to address the challenges posed by its expenditures, including the provision of social amenities and operational costs.
Werigbelegha et al. (Thu,) studied this question.