Value Added Tax (VAT)and Manufacturing Output inNigeria: An Empirical Analysis

Ismaila Akolapo Samotu, Abdulfatai Salawudeen and Taiwo RazaqIbrahim
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Ismaila Akolapo Samotu: University of Ilesa,Osun State
Abdulfatai Salawudeen: University of Ilesa,Osun State
Taiwo RazaqIbrahim: Osun State University, Osogbo

International Journal of Governance and Development Studies (IJOGDES), 2024, vol. 11, issue 1, 27-44

Abstract: The study examined the trend pattern of Value Added Tax revenue and manufacturing output in Nigeria; it also determined the causal link between the VAT revenue and manufacturing output in the country and estimated the magnitude of the impact of VAT on manufacturing output in Nigeria. These were to empirically investigate the impact of Value Added Tax on manufacturing output in Nigeria.Four macroeconomic variables were used. The variables are Manufacturing output, Value Added Tax (VAT), Company Income Tax (CIT), and Petroleum Profit Tax (PPT). Data were sourced from the Central Bank of Nigeria Bulletin and the Federal Inland Revenue Service. Data collected were analyzed using tables, graphs, the Autoregressive Distributed Lag (ARDL) method, and the Granger Causality test. The result from the trend pattern analysis showed that VAT and manufacturing output moved in the same direction. Also, correlation coefficient analysis revealed a strong and positive relationship. Granger causality test concluded bidirectional causality between VAT and manufacturing output. The estimates from the ARDL revealed that VAT had a positive and statistically significant effect on manufacturing output in the short run (t= 29, p 0.1) in the country. The study therefore concluded that Value Added Tax had a positive effect on Manufacturing output in Nigeria

Keywords: Manufacturing Output; Macroeconomic Variables; Autoregressive Distributed Lag(ARDL); Value Added Tax (VAT); Causality (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ris:ijogde:021702

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