Comparative Analysis Of The Effect Of Value Added Tax (Vat) On Economic Growth: Emprical Study Of Nigeria And Ghana 2003 - 2016

ABSTRACT

There has been  an argument   on whether   to increase  the  VAT rate  or VAT base  in countries.   To ascertain  this,  this study  compared   the  impact  of  value  added  tax  on the  economic   growth  of Nigeria and Ghana.  The ex-post  facto  research  design  was adopted  for  the study  and data  were collected  from   Federal   Inland   Revenue    Services   {FIRS}   and   Central  Bank   of  Nigeria  (CBN} Statistical   Bulletin;   and  Statistical   Bulletin  of  Ghana  Central  Bank for  the  period  2003-2016. Economic growth  was proxied  by real GDP  while  VAT was measured by VAT revenues  in the two countries  under  review.  For comparative   purposes,   the  local currencies  of  the  countries  under review  were  used.   The study   employed   Ordinary   Least  Square  {OLS)   regression   method.    The regression  results  revealed  that  value  added  tax  (VAT) has  a positive   and significant   effect on economic  growth  in Nigeria and  Ghana but its impact  in Nigeria's  economic   growth  was higher when  compared   to  Ghana's.   It  was  recommended    that  Nigeria  should  increase  her  VAT rate while Ghana should  increase  her VAT base