Effect Of Value Added Tax On The Growth Of Nigerian Economy

Effect Of Value Added Tax On The Growth Of Nigerian Economy

Abstract

In this exploration work named Effect of Value Added Tax( Handbasket) on the growth of Nigerian frugality with particular reference to Enugu State Board of Internal Revenue( ESBIR). The experimenter examined the relationship between Handbasket profit and Gross Domestic Product of Nigeria. The relationship between Handbasket profit and severance rate in Nigeria. And also estimated the effect of growth pattern of Handbasket profit on affectation rate in Nigeria. Data for the study was sourced through CBN Annual report and journal papers related to the subjects matter. The data collected was anatomized using SPSS. The results of the study revealed that advised t- statistics( t = 0.415) for GDP is lower than tabulated t- statistics at0.05 position of significance. The overall retrogression model is statistically significant in terms of its overall virtuousness of fit( f = 0.555, p<0.05). As a result of this the study accepts the indispensable thesis meaning that there’s significant relationship between Handbasket profit and gross domestic product of Nigeria. The experimenter observed that growth pattern of value added duty profit on affectation rate in Nigeria. It was also observed that there’s significant relationship between Handbasket profit and severance rate in Nigeria. The study inversely discovered that there’s significant relationship between Handbasket profit and gross domestic product of Nigeria. Grounded on the findings the experimenter recommends that Tax Act 1993should be established to reduce cases of duty elusion and remittance of duty collections especially custom and excise duties which reported a negative effect on GDP. Only professionals and secure hands should be responsible for duty administration. All levies should be remitted via ane-payment system or via direct payment to the colorful duty authorities’ accounts. This will enhance and support the cashless frugality system introduced lately. Tax Clearance instruments and other duty documents used in government deals should be appertained back to the applicable profit authority for authentication

Chapter One

Preface

Background Of The Study

Value Added Tax( Handbasket) is a consumption duty, levied at each stage of the consumption chain and borne by the final consumer of the product or service. The administration of Handbasket is fairly easy, unselective and delicate to shirk. Countries each over the world, look for ways to boost their profit, this eased numerous nations to introduce value added duty on goods and services. For case in Africa, Handbasket has been introduced in Benin Republic, Cote d’Ivore, Guinea, Kenya, Madagascar, Mauritius, Senegal, Togo, Nigeria. substantiation suggests that in these countries Handbasket has come an important contributor to government profit( Ajakaiye, 2000; Shalizi and Square, 1988; Adereti, Adesina and Sanni, 2011).

Nigeria introduced Handbasket in 1993, still its full perpetration began on 1st January, 1994. This has attracted the attention of experimenters and academia on its benefit on the profitable growth of Nigeria. profitable growth as measured the increase in the public income or total volume of product of goods and services of a country accompanied by advancements in the total standard of living of the people( Chinwuba and Amos, 2011 as cited in Ihendinihu and Onwuchekwa, 2012). Affiliated workshop on this content concentrated on the impact of Handbasket on profitable growth, measured with GDP. Our ideal then’s to probe the growth pattern of Handbasket on GDP, the effect of the changes in Handbasket and target and Handbasket factual on the frugality, and also the effect of Handbasket profit on duty profit.

The value Added duty decree 102 of 1993 was established and was assessed on 1994 to replace deals duty in Nigeria. The Value Added Tax in Nigeria were created as relief for the deals levies that were in operation before they were assessed on all goods that were manufactured in the country and goods produced outside the country and were vended in Nigeria. The Value Added Tax( Handbasket) in an ideal form of taxation in Nigeria duty system, has significantly contributed to coffers rallying as well as capital conformation to the frugality. It has positive and significant effect on profit rallying in Nigeria; it also has positive relationship with consumption. It has positive and significant effect on profit rallying in Nigeria.

Handbasket is a consumption duty that’s fairly easy to administer and delicate to shirk and it has been embraced by numerous countries worldwide( Federal Inland Revenue Service 1993). substantiation so far supports the view that Handbasket profit is formerly a significant source of profit in Nigeria. For illustration, factual Handbasket profit from 1994 was N8.189 billion which is36.59 advanced than the projected N6 billion for the time. also, factual Handbasket profit for 1995 was N21 billion compared with the projected N12 billion. In terms of donation to total civil profit collection, Handbasket reckoned for about4.06 in 1994 and5.93 in 1995. As much as N404.5 billion was collected on Handbasket(5.1) of total profit in 2008.

Handbasket profit is generated for distribution to the state and original government in Nigeria, Unlike the oil painting profit. This helps to reduce over dependence on oil painting profit, this assures a sustainable profitable growth and development. While the performance of Handbasket as a source of profit in Nigeria is encouraging, it means delicate to find attempts to totally assess the effect on Handbasket on the frugality.

Recent exploration work on the impact of taxation on the Nigeria frugality impact up all the colorful levies together without segregating Handbasket. How and in what direction Handbasket has be affecting the Nigeria frugality? And the relationship of Handbasket on profitable growth? Findings answers to this and other analogous questions is the main trust of this paper.

Statement Of The Problem

The station of Nigerians towards taxation is worrisome as numerous prefer not to pay duty if given the occasion. The frugality continues to lose huge quantum of profit through the unwholesome practice to duty avoidance and duty elusion, this loss of profit can change the fortune of numerous husbandry, particularly, developing countries like Nigeria. This problem has been moping for so long which critical attention and result is over due to the cost of collecting duty in Nigeria.( Both social and profitable cost) is too high to the extent that if left unbounded, the cost may soon overweigh the benefit or value deduced from similar operation and that won’t the applicable for the system. In Nigeria, Handbasket is one of the instruments the civil government introduced to induce fresh profit. Yet, utmost prominent Nigerians and interest groups had spoken against its preface. It would appear that Handbasket is drool with some problems. For the purpose of this design work, we shall examine the counteraccusations of Handbasket on profit generation in Nigeria and how Handbasket affects the profitable growth in Nigeria.