A Causal and Long-run Nexus Between Value Added Tax and Economic Growth of Nigeria (1994-2017)
International Journal of Finance and Banking Research
Volume 5, Issue 6, December 2019, Pages: 145-153
Received: Aug. 19, 2019;
Accepted: Sep. 26, 2019;
Published: Nov. 5, 2019
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Ubesie Madubuko Cyril, Department of Accountancy, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria
Igweonyia Obiageli Virginia, Department of Accountancy, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria
Ozo-Ubaka Chikaodili Julie, Department of Accountancy, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria
This study empirically examined the causal and long-run relationships between taxation and economic growth of Nigeria. It spanned from 1994 to 2017 and utilized annual time series secondary data extracted from the Central Bank of Nigeria (CBN) statistical bulletin (2017) edition. Ex-post facto research design was adopted while the Vector Autoregressive (VAR) method of Pairwise Granger Causality test and Vector Error Correction Mechanism (VECM) were employed. Findings revealed a significant long-run and short-run influence of VAT and revenue on Nigerian Gross Domestic Product (GDP). However, the Granger causality test result showed thatgrowth in GDP drives VAT and revenue growth in Nigeria without a feedback. This implies that taxes and tax revenue are substantial for the sustainable growth of Nigerian economy. However, if more goods and services are taxed, the revenue base of the country will increase. Based on these findings, it was recommended among other that the monoproduct economy of Nigeria should be diversified along the line of taxation since there exists a directional relationship between taxation and economic growth in Nigeria. Individuals and organizations should pay up their taxes while revenue generated from these taxes should be appropriately utilized for the good of citizens and as well growth of the economy.
Ubesie Madubuko Cyril,
Igweonyia Obiageli Virginia,
Ozo-Ubaka Chikaodili Julie,
A Causal and Long-run Nexus Between Value Added Tax and Economic Growth of Nigeria (1994-2017), International Journal of Finance and Banking Research.
Vol. 5, No. 6,
2019, pp. 145-153.
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