Causality Between Valued Added Tax (VAT) and Nigerian Economy: An ECM Approach

Nwaoha William Chimee*, Onwuka Onwuka Okwara, Ejem Chukwu Agwu and Ogbuewu Kalu James
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Nwaoha William Chimee*: Lecturer, School of General Studies, Federal Polytechnic of Oil and Gas, Bonny Island, Rivers State, Nigeria
Onwuka Onwuka Okwara: Lecturer, Dept. of Accountancy, Abia State University, Uturu, Nigeria
Ejem Chukwu Agwu: Lecturer, Dept. of Banking & Finance, Abia State Polytechnic, Aba, Nigeria
Ogbuewu Kalu James: Lecturer, Dept. of Business Adm. & Mgt., Abia State Polytechnic, Aba, Nigeria

International Journal of Economics and Financial Research, 2018, vol. 4, issue 7, 226-234

Abstract: This study used error correction model (ECM) to analyse the causality between Value Added Tax (VAT) and the Nigerian Economy proxied by GDP during the period 1994-2015. The data such as VAT and GDP were obtained from Central Bank of Nigeria (CBN) statistical bulletin and Federal Inland Revenue Services (FIRS). The results of the findings revealed that VAT exerts positive and significant influence on GDP while there was evidence of unidirectional causality running from VAT to GDP. Therefore, the researchers recommend that in order to enhance economic growth of Nigeria through VAT revenue, there is need to plug all the lapses identified in tax administration and educate the tax administrators as well as the entire populace on the relevant of VAT revenue to the economy.

Keywords: VAT; GDP; ECM; CBN. (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:arp:ijefrr:2018:p:226-234

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