Value Added Tax, Governance and Economic Growth in a Democratic Era A Study of Nigeria

Main Article Content

Chinweoke Nwaeze (PhD)
Kalu Maurice Chukwu
Ufomadu Ogechukwu Abel


Economic growth can be seen as an effect of both taxation and different strategies of governance applied to enhance the national macroeconomic environment. Taxes and governance are determining factors in the evolution of socio-economic life, influencing also economic growth. This paper aimed to identify the relationship between value-added tax, governance and economic growth of Nigeria using the Autoregressive Distributed Lag (ARDL). Based on the annual data from Nigeria, the Granger causality test was applied to identify the cause-and-effect mechanism of the variables. The results revealed that value-added tax enhances economic growth but this could be hampered by bad governance. In terms of the Granger causality test, VAT and governance indices collectively influenced real gross domestic product (measure of economic growth) and the combination of real gross domestic product and governance indices influenced value-added tax. Recommendations were made that the government should make sure that money raised through VAT is properly utilized for infrastructure improvements that are obvious for taxpayers to see and appreciate, including strengthening the collection apparatus, closing loopholes, and making room for a more efficient VAT system.

Keywords: Governance, Economic Growth, Revenue Mobilization, Taxes, Value Added Tax

Article Details

Value Added Tax, Governance and Economic Growth in a Democratic Era: A Study of Nigeria. (2024). African Journal of Management and Business Research, 15(1), 285-308.

Copyright (c) 2024 Chinweoke Nwaeze (PhD), Kalu Maurice Chukwu, Ufomadu Ogechukwu Abel (Author)

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This work is licensed under a Creative Commons Attribution 4.0 International License.

Chinweoke Nwaeze (PhD), Abia State Polytechnic, Aba.

Department of Banking and Finance,

Abia State Polytechnic, Aba.

Kalu Maurice Chukwu, Abia State Polytechnic, Aba.

Department of Business Administration and Management,

Abia State Polytechnic, Aba.

Ufomadu Ogechukwu Abel, Abia State Polytechnic, Aba.

Department of Accountancy,

Abia State Polytechnic, Aba.

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