VAT has imitated relationships in daily life, and it can happen anywhere, every day, affecting people’s lives. According to the Statement of Standard Accounting Practice (SSAP, 1993), VAT is a tax on the supply of goods and services that is eventually borne by the final consumer but is collected at each stage of the production and distribution chain. This study, the assessment of the effect of Value Added Tax on Consumption Behaviour, was undertaken to investigate the impact of VAT on consumers’ consumption patterns. The descriptive data analysis method was used to examine five wards in Maiduguri. The information was gathered using both primary and secondary sources. The data gathered from the questionnaire was analyzed using  SPSS. The study discovered that residents, particularly in rural areas, are unaware of VAT. It is also discovered that VAT payers in these areas are unaware of the impact of VAT on their daily purchases. However, VAT reduces these households’ purchasing power. The study recommended an awareness campaign in these areas, as well as the inclusion of VAT knowledge in academic curricula.


The title page

Page of approval




Contents table



1.1 Background of the research

1.2 Problem identification

1.3 Purpose of the research

1.4 Hypotheses for Research

1.5 Significance of the study

1.6 Scope and limitation of the study

1.7 Definition of terms

1.8 Organization of the study





3.1 Research Design

3.2 Source of Data

3.3 Population of the Study

3.4 Sample Size

3.5 Methods of Data Collection

3.6 Method of Data Analysis



4.1 Introductions

4.2 Data analysis


5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation




1.1 Background of the Study

Governments all over the world require funds to effectively administer and control their economic activities, and taxation is one source of revenue. Taxation can be defined in a variety of ways. It is fundamentally a compulsory levy on income because the decision to pay tax is not made by the taxpayers. Taxation is the process or machinery by which communities or groups of people are forced to contribute in some agreed-upon amount and method for the administration and development of society (Igbonyi, 2008). Amaechina (1998:9) defines taxation as “a levy imposed by a government on the income of citizens or corporations in a state for which the government provides no direct benefit to the taxpayer” or “a levy imposed by a government on the income of citizens or corporations in a state for which the government provides no direct benefit to the taxpayer.” non-punitive but mandatory levy by the government on the properties and income of individuals and corporations”. Taxation has always been a means by which communities have been provided with common facilities such as access roads, religious facilities, and security, amongst others, in the current dispensation of the Nigerian economy (Obadimi, 1994). Taxation in Nigeria dates back to the early twentieth century, during the reign of the colonial masters. The introduction became necessary as a result of the government’s massive workload. Taxation is now enforced by the three tiers of government in Nigeria, namely the local, state, and federal governments. The tasks concern how the government can exert control over its economic activities and how the government can achieve the How to control the supply of money and the desired level of price inflation and deflation. In recent years, the Nigerian tax system has undergone significant changes. The tax laws are being reviewed in order to eliminate obsolete provisions and simplify the main ones. Nigeria’s modern and well-regulated taxation system began in 1940, with the passage of the year’s direct taxation ordinance No. 29 (CAP 54). Prior to the 1940 ordinance, Lord Lugard introduced an income tax in northern Nigeria in 1904. It was known as the community tax, and it underwent several changes. The Federal Government established a study group in 1991 to review the entire tax system, which resulted in the idea of introducing VAT in Nigeria. system. VAT was proposed, and a committee was formed to study the feasibility of its implementation. The then-government agreed in January 1993 to implement VAT by the middle of the year. It was later pushed back to September 1st, 1993, by which time the necessary legislation would have been enacted and the necessary groundwork would have been completed. However, actual implementation did not begin until January 1994, following the promulgation of Value Added Tax Decree No. 102 of 1993. Valued Added Tax (VAT) is a tax charged on consumption of goods and locally or imported into the country. From the buyer’s perspective, it is a tax on the purchase price, while the seller views it as a tax only on the value added to an item, material, or service (Tabansi, 2001). On April 10, 1954, Maurice Laure, joint director of the French Tax Authority, was the first to introduce VAT, despite the fact that German industrialist Wilhelm Van Siemens proposed the concept in 1918. It was initially aimed at large corporations, but it was later expanded to include all business sectors. It is the most important source of state finance in France, accounting for nearly half of state revenue (Thacker, 2009). VAT became operational in Nigeria on January 1, 1994. (Noko 2006). Despite the fact that Nigeria only recently joined the league of countries that use VAT, the country has very distinct characteristics in how the policy is implemented. It is charged at a flat rate of 5% on certain items of merchandise. as well as services. As a reminder, VAT is not levied directly on your profits, as is the case with some other forms of taxation, so it is not a direct form of taxation. It is, as the name suggests, a tax on the value added to goods and services. Because value is added to a product during the manufacturing process, VAT is charged on the amount of value added to the goods and services provided, and this is why VAT is payable on the goods and services ‘consumed’ by any ‘person’. In this context, consumed means used up, and ‘any person’ refers to whether you are an individual, a business, or the government.

1.2 Statement of the Problem

In terms of reforms and restructuring, value added tax (VAT) has received a lot of attention around the world. Perhaps this is due to its significant contributions to government revenue, growth, and development in many economies (Owolabi & Okwu, 2011). Many countries have shifted, and a few others are considering, toward higher indirect taxation as a reliable source of government revenue. VAT is expected to influence consumer behavior because it increases consumption expenditure. The term “consumption” is inherent in the VAT concept. According to Plunkett (2008), VAT generally applies to goods purchased for consumption within a given country. Indeed, as defined by Ghatak (2003), VAT is a consumption-based tax. In the same way, the European Commission (2000,) defines This tax is referred to as a “general consumption tax” because it is directly proportional to the price of goods and services. As Sopkova and Spisiakova (2007) pointed out, VAT is a burden for the end consumer through the prices of goods and services. Abed goes on to say that the VAT tax burden is primarily on consumption. This implies that VAT affects consumer prices and consumption habits. Thus, the price effects of VAT and the resulting consumer consumption behavior are important issues for countries and their VAT policies. This study was undertaken with the goal of determining the impact of Value Added Tax on consumer behavior.

1.3 Objective of the Study

The primary goal of this research is to thoroughly examine the effects of VAT on final consumer consumption behavior. The following are the study’s specific objectives:

to assess the impact of VAT on goods and services consumption;

to see if there is a change in consumption patterns following the implementation of VAT;

To assess the significance level of the effect of VAT on the consumption patterns of Maiduguri households and to evaluate the VAT encouraging saving scheme.

⦁ Research Questions

What effect does VAT have on the consumption of goods and services?

Is there a significant change in the consumption patterns of Maiduguri households?

What is the significant level of impact on the consumption patterns of Maiduguri households?

1.5 Research Hypotheses

H0: There has been no discernible change in the consumption patterns of Maiduguri households as a result of the implementation of VAT.

H1: The implementation of VAT has resulted in a significant change in the consumption pattern of households in Maiduguri.

H0: The impact of VAT on household consumption patterns in Maiduguri is negligible.

H0: The impact of VAT on household consumption patterns in Maiduguri is negligible.

1.6 Significance 

The study is significant because it will serve as a reliable source for understanding the fundamentals of value added tax in the Nigerian context. It will also serve as an academic bank for academic scholars and knowledge-hungry individuals, where the effects of value added tax can be referenced, particularly as they affect household consumption style.

1.8 Scope of Study

This research, “the Assessment of the Effect of VAT on Consumption Behavior,” is an academic tool for raising awareness about the impact of VAT. The research is limited to VAT and other forms of taxation. Furthermore, the case study is limited to households in Maiduguri’s five wards. This limitation is based on the study’s time frame and the availability of relevant and related information. The study, however, can be expanded to other states.

1.9Definition of Terms

VAT stands for Value Added Tax.

Vatable goods are those that can be taxed.

Vatable Person —any person or organization registered with the FIRS who is authorized to collect and remit VAT.

Tax evasion is a deliberate attempt to avoid paying taxes altogether.

Tax avoidance is an attempt to reduce the amount owed.

VAT RATE: the tax rate levied on VATable goods or services.

Tax: This is a compulsory levy imposed by government on the income of corporate organizations as well as on income of individuals.

Consumption Behavior: is the study of individuals, groups, or organizations and all the activities associated with the purchase, use and disposal of goods and services, including the consumer’s emotional, mental and behavioural responses that precede or follow these Aactivities.

1.10 Organization of the Study Scope 

This research is divided into five chapters. The first chapter provides context for the study, as well as the research problem and hypotheses for testing. The second chapter is organized to provide a literature review for the study. This review is organized into three sections: theoretical framework, empirical framework, and conceptual framework. The third chapter discusses research methodology, which includes the research design, sampling method, data collection, and research instruments used. Chapter four aims to analyze the results; it also includes a detailed analysis of the data collected and information presentation using quantitative and statistical models. The summary, conclusion, and recommendation are all covered in the fifth chapter.


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