Causality between VAT and economic growth in Nigeria: An ARDL bounds testing approach / Hammed Agboola Yusuf … [et al.]

Yusuf, Hammed Agboola and Zainal Abidin, Irwan Shah and Bakar, Normiza and Musibau, Oluwaseyi Hammed (2018) Causality between VAT and economic growth in Nigeria: An ARDL bounds testing approach / Hammed Agboola Yusuf … [et al.]. Journal of Emerging Economies & Islamic Research, 6 (1). pp. 1-13. ISSN 2289-2559

Abstract

Value Added Tax(VAT) is a consumption tax imposed at every stage of consumption level whose burden is burned by final consumer of goods and services. In most developing economies in the world, VAT as a source of revenue to the government that has been notable for its significant role in ensuring economic efficiency. However, VAT revenue has been underutilised in Nigeria due to a high level of corruption in the process of administering the tax. This study examines the impact of VAT, domestic investment and trade openness on economic growth in Nigeria from 1980 to 2016 using ARDL techniques. The research design is time series, and the data were analysed using time series unit root test, error correction model regression, short run and long run ARDL. The result found that VAT, domestic investment and trade openness had a positive and significant impact on real GDP. Also, corruption index is negative also significant in the long run. In the same vein, past value added tax had a negative and weak significant impact on real gross domestic product indicating convergence to long-run causality between economic growths and VAT and economic growth. The Error Correction Model (ECM (-1)) coefficient had a negative and statistically significant sign. This shows that 39 percent can quickly correct short-run deviation. The study, therefore, recommends that tax administrative loopholes should be plugged for tax revenue to contribute immensely to the development of the economy since past VAT had a significant impact on economic growth.

Metadata

Item Type: Article
Creators:
Creators
Email / ID Num.
Yusuf, Hammed Agboola
UNSPECIFIED
Zainal Abidin, Irwan Shah
UNSPECIFIED
Bakar, Normiza
UNSPECIFIED
Musibau, Oluwaseyi Hammed
UNSPECIFIED
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HC Economic History and Conditions > Income. Income distribution. National income. Including gross national product, gross domestic product, and gross state product
Divisions: Universiti Teknologi MARA, Selangor > Puncak Alam Campus > Faculty of Business and Management
Journal or Publication Title: Journal of Emerging Economies & Islamic Research
UiTM Journal Collections: UiTM Journal > Journal of Emerging Economies and Islamic Research (JEEIR)
ISSN: 2289-2559
Volume: 6
Number: 1
Page Range: pp. 1-13
Keywords: VAT, Corruption, Economic growth, ARDL
Date: January 2018
URI: https://ir.uitm.edu.my/id/eprint/32247
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