Value Added Tax (VAT) is a consumption tax on the value added to a product in the process of production. Like all other indirect taxes, it is a tax that targets the final consumer of goods and services. The main purpose of VAT in Nigeria is to increase government (state and Local) revenue from the non-oil sector thereby reducing the government’s dependence on oil sales and the budget deficits. In this research work my aim is to determine the stabilizing roles of VAT in the Nigerian economy. The study employed multiple regression analysis as a method of study using the ordinary least square (OLS) regression technique in estimation. Result of the analysis revealed that price level is not stimulated by VAT in Nigeria.

The introduction of value added tax(VAT) in Nigeria came from the report of the study group set up by the federal government in 1991 to review the entire tax system in the set up to carry out feasibility studies on its possible implementation.

In January 1993, the federal government agreed to introduce VAT by the middle of the year. But due to some logistic reasons for the relevant legislation to be made and proper ground work done. It was shifted to January 1st 1994.

VAT replaced the former existing sales tax carried out by the different state3 governments, the wages first implemented in 1986 and operated under the federal government legislated degree no.7, of 1986. VAT replaced the sales tax because of the following reasons.

VAT is neutral in that a considerable part of the new tax is to be realized fr5om imported goods unlike the sales tax that targets only locally produced goods based on the general consumption behavior.....

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Item Type: Project Material  |  Attribute: 51 pages  |  Chapters: 1-5
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