Impact of value added tax on manufacturing sector performance in Nigeria

Authors

  • A. Onoh Department of Economics, University of Nigeria, Nsukka
  • I.C. Ezema Department of Economics, University of Nigeria, Nsukka
  • S.C. Ezeh Department of Entrepreneurship and business management technology, Federal University of Technology, Minna
  • C.A Eneh Department of Agricultural Economics, University of Nigeria, Nsukka

Abstract

This study examined the impact of VAT on the manufacturing sector performance in Nigeria between the periods of 1994 to 2019. Annual time series data were collected from the CBN statistical bulletin and World Bank. The work adopted the Auto Regressive Distributive Lag (ARDL) method of estimation. The dependent variable used was manufacturing sector output (MQ) while the explanatory variables used were VAT Revenue (VAT), Government capital expenditure (GCAP), Interest rate (IR) and Government effectiveness (GE). In order to reduce the problem of stationarity and structural breaks associated with time series data, some of the variables were logged. The results reveals that, despite being significant, a positive long run and short run relationship exists between VAT revenue and manufacturing sector output. The results also indicates that a unidirectional casuality exist from VAT revenue to manufacturing output. Consequently, the work recommends that government should make available proper VAT
awareness, enlightenment programmes, seminars and workshops through the First Inland Revenue Services (FIRS) among the VAT payers on the need for prompt VAT payments.
Keywords: Value added tax; Manufacturing sector performance; Revenue and expenditure

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Published

2023-10-26

Issue

Vol. 11 No. 1-2 (2020): Technoscience Review Volume 11 Number 1-2 November 2020

Section

Articles

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