Value-Added Tax (Vat) and Sustainable Development in Nigeria

Emeka-Ngama Pauline Chinenye; Uwazie I. Uwazie; Ph.D.

doi:10.56201/ijefm.v11.no10.2026.pg21.35

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Value-Added Tax (Vat) and Sustainable Development in Nigeria

Emeka-Ngama Pauline Chinenye , Uwazie I. Uwazie, Ph.D.

Abstract

This study examined the effective utilization of value-added tax revenues in improving sustainable development in Nigeria. The specific objectives of the study are to: (1) Evaluate the effect of Value-Added Tax on sustainable development in Nigeria. (2) Assess the effect of Value-Added Tax when used for recurrent spending on sustainable development in Nigeria. (3) Assess the effect of Value-Added Tax when used for capital spending on sustainable development in Nigeria. The study further utilized data ranging from 1994 to 2024, with per capita income as a proxy for sustainable development, while using Value-Added Tax as the core variable and government recurrent expenditure, capital expenditure, together with their interaction variables, and inflation rate as control variables. The data were sourced from the World Development Indicators and the Central Bank of Nigerian Bulletin. The study adopted the Endogenous Growth Theory, which explains how long-run economic growth is generated from within an economy rather than driven solely by external factors. Analyzed using the Error Correction approach, the study found that value-added tax had a negative but statistically insignificant short-run effect on per capita income (β = −0.0478; p = 0.3114). This implies that increases in value-added tax revenue alone did not significantly improve sustainable development during the study period, suggesting that the developmental impact of value-added tax depends largely on how the revenue is utilized. Governments are advised to focus less on revenue mobilization alone and more on ensuring that value-added tax proceeds are channeled into productive and development-enhancing activities. Stronger monitoring, transparency, auditing and accountability mechanisms should be introduced to minimize leakages and ensure that value-added tax revenue contributes meaningfully to improvements in national income in Nigeria.

Keywords

Value-Added TaxDevelopmentEndogenous GrowthGovernment ExpenditureECM

References

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Value-Added Tax (Vat) and Sustainable Development in Nigeria

Abstract

Keywords

References

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