International Journal of Finance and Banking Research

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A Causal and Long-run Nexus Between Value Added Tax and Economic Growth of Nigeria (1994-2017)

Received: Aug. 19, 2019    Accepted: Sep. 26, 2019    Published: Nov. 05, 2019
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Abstract

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.

DOI 10.11648/j.ijfbr.20190506.13
Published in International Journal of Finance and Banking Research ( Volume 5, Issue 6, December 2019 )
Page(s) 145-153
Creative Commons

This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.

Copyright

Copyright © The Author(s), 2024. Published by Science Publishing Group

Keywords

Taxation, Economic Growth, Revenue, Vector Error Correction, Granger Causality

References
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Cite This Article
  • APA Style

    Ubesie Madubuko Cyril, Igweonyia Obiageli Virginia, Ozo-Ubaka Chikaodili Julie. (2019). A Causal and Long-run Nexus Between Value Added Tax and Economic Growth of Nigeria (1994-2017). International Journal of Finance and Banking Research, 5(6), 145-153. https://doi.org/10.11648/j.ijfbr.20190506.13

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    ACS Style

    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). Int. J. Finance Bank. Res. 2019, 5(6), 145-153. doi: 10.11648/j.ijfbr.20190506.13

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    AMA Style

    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). Int J Finance Bank Res. 2019;5(6):145-153. doi: 10.11648/j.ijfbr.20190506.13

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  • @article{10.11648/j.ijfbr.20190506.13,
      author = {Ubesie Madubuko Cyril and Igweonyia Obiageli Virginia and Ozo-Ubaka Chikaodili Julie},
      title = {A Causal and Long-run Nexus Between Value Added Tax and Economic Growth of Nigeria (1994-2017)},
      journal = {International Journal of Finance and Banking Research},
      volume = {5},
      number = {6},
      pages = {145-153},
      doi = {10.11648/j.ijfbr.20190506.13},
      url = {https://doi.org/10.11648/j.ijfbr.20190506.13},
      eprint = {https://download.sciencepg.com/pdf/10.11648.j.ijfbr.20190506.13},
      abstract = {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.},
     year = {2019}
    }
    

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  • TY  - JOUR
    T1  - A Causal and Long-run Nexus Between Value Added Tax and Economic Growth of Nigeria (1994-2017)
    AU  - Ubesie Madubuko Cyril
    AU  - Igweonyia Obiageli Virginia
    AU  - Ozo-Ubaka Chikaodili Julie
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    DO  - 10.11648/j.ijfbr.20190506.13
    T2  - International Journal of Finance and Banking Research
    JF  - International Journal of Finance and Banking Research
    JO  - International Journal of Finance and Banking Research
    SP  - 145
    EP  - 153
    PB  - Science Publishing Group
    SN  - 2472-2278
    UR  - https://doi.org/10.11648/j.ijfbr.20190506.13
    AB  - 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.
    VL  - 5
    IS  - 6
    ER  - 

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Author Information
  • Department of Accountancy, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria

  • Department of Accountancy, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria

  • Department of Accountancy, Enugu State University of Science and Technology (ESUT), Enugu, Nigeria

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