Abstract: This study contributed to knowledge by examining the effect of Value Added Tax (VAT) means of revenue generation on Price firmness in Nigeria by finding out the role VAT is playing in the Inflation rate in Nigeria. The ex-post facto research design was embraced, and data were sourced from the Central Bank of Nigeria (CBN) Statistical Bulletin for the period 1994 to 2018. The study employed simple linear regression model (ordinary least square (OLS)) via E-Views 10 statistical package in analyzing data. The results of the inquiry indicate that there is a significant connection between VAT and price stability (Inflation Rate) in Nigeria. The result of the investigation revealed that divergent to the view by commercial business owners that VAT elevated the prices of their products, which engenders inflationary outcome. Value Added Tax (VAT) has no inflationary significance in Nigeria. Increased tax returns from VAT does not give rise to inflation in Nigeria and recommends that, although transparency is inevitable in today’s global economy, sequencing of faces of liberalization is necessary to check possible inflationary consequences in Nigeria, therefore advocates for relative increase in the overall share of VAT within the context of fiscal policy whenever expansionary financial measures are adopted for achieving the goal of economic growth.
Keywords: Value Added Tax, Price Stability, Inflation Rate, Nigeria.
Title: EFFECT OF VALUE-ADDED TAX (VAT) ON PRICE FIRMNESS IN NIGERIA: A TIME SERIES ANALYSIS
Author: EZE Gbalam Peter, Emmanuel ATAGBORO
International Journal of Social Science and Humanities Research
ISSN 2348-3156 (Print), ISSN 2348-3164 (online)
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