Influence of Value Added Tax on Economic Development (The Nigeria Perspective)

Abstract

Synopsis of tax administration system in Nigeria fascinates divergent views, especially in relation to VAT
effectiveness in enhancing economic development. There are concerns in some quarters that VAT administration in Nigeria
is plagued by structural defects on multiple fronts. This paper therefore investigated the effectiveness of VAT system in
Nigeria to evaluate its influence on economic development. Meta-analytic result from research on VAT administration in
Nigeria assert the importance of effective tax administration system to assist Nigerian government diversify its revenue
stream. Finding the nexus between effective VAT administration and economic development is the crux of this paper which
adopted two constructs to investigate the subject matter (FCR and GDP). The justification stem from seemingly dearth of
nexus in research on the influence of VAT on development and how this tax tool can help government actualize its departure
from single revenue stream (crude oil). Simple linear regression was employed to analyze data which shows a positive
relationship between VAT, FCR and GDP.