Value Added Tax (VAT) and Manufacturing Output in Nigeria

Authors

  • Ismaila Akolapo Samotu University of Ilesa, Ilesa, Osun State, Nigeria
  • Abdulfatai Salawudeen University of Ilesa, Ilesa, Osun State, Nigeria
  • Taiwo Razaq Ibrahim Osun State University, Osun State, Osogbo, Nigeria

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 with a view to emptically investigating 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 used were sourced from Central Bank of Nigeria Bulletin and Federal Inland Revenue Service. Data collected were analysed using tables, graphs, Autoregressive Distributed Lag (ARDL) method and 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 strong and positive relationship. Granger causality test concluded bidirectional causality between VAT and manufacturing output. The estimates from the ARDL revealed  that VAT had positive and statistically significant effect on manufacturing output in the short run (t= 29, p < 0.05) but it did not have a statistically significant effect on the manufacturing output in the long run ( t=1.42, p > 0.1) in the country.

The study therefore concluded that Value Added Tax had positive effect on Manufacturing output in Nigeria.

Keywords: Manufacturing Output, Macroeconomic Variables, Autoregressive Distributed Lag (ARDL), Value Added Tax (VAT), Causality.

Department of Local Government and Development Studies, Obafemi Awolowo University, Ile-Ife

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Published

2024-12-14 — Updated on 2024-12-31

How to Cite

Samotu, I. A., Salawudeen, A., & Ibrahim, T. R. (2024). Value Added Tax (VAT) and Manufacturing Output in Nigeria. International Journal of Governance and Development Studies (IJOGDES), 11(1), 27–44. Retrieved from https://ijogdes.oauife.edu.ng/index.php/ijogdes/article/view/15

Issue

Vol. 11 No. 1 (2024): International Journal of Governance and Development Studies

Section

Articles

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