Get the complete project »
- The Complete Research Material is averagely 52 pages long and it is in Ms Word Format, it has 1-5 Chapters.
- Major Attributes are Abstract, All Chapters, Figures, Appendix, References.
- Study Level: BTech, BSc, BEng, BA, HND, ND or NCE.
- Full Access Fee: ₦4,000
THE EFFECT OF VALUE ADDED TAX ON PRICE STABILITY IN NIGERIAN ECONOMY”
1.1 BACKGROUND TO THE STUDY
The desire of every patriotic citizen of Nigeria is to have a sound and buoyant economy. One way of demonstrating such a desire is through the prompt payment of taxes to the government. One of the means by which government increases its internally generated revenueis Value Added Tax (VAT). This is a tax on the supply of goods and services whichis eventually borne by the final consumer, but collected at each stage of theproduction and distribution chain. VAT as a concept was first introduced by Francein 1954, and has over time been embraced by well over 70 countries. It has inrecent time become a major source of revenue in many developing countries,including the sub-Saharan African countries. Shalizi and Squire (1989) found thatVAT accounted for about 30 percent of total tax revenue in Ivory Coast, Kenya andSenegal in 1982. Bogetic and Hasan (1993) found that Indonesia introduced VATin 1983, and by 1988, the ratio of VAT revenue to GDP had risen to 4.5 percent.
This impressive record in virtually all countries where it was introduced clearlyinfluenced the decision to introduce VAT in Nigeria in January 1994 as areplacement for the existing sales tax. It was imposed on all goods manufactured inNigeria, as well as on the goods that were imported and sold domestically. TheFederal Inland Revenue Service (FIRS), the agency in charge of tax administrationin Nigeria, pointed out that VAT is a consumption tax that is relatively easy toadminister and difficult to evade, and has been embraced by many countries(FIRS, 1993a; 1993b; 1993c). In this context, it becomes necessary to empiricallyexamine the likely macroeconomic impact of VAT administration.
Evidence so far supports the view that VAT is already a significant source ofrevenue in Nigeria. For instance, VAT revenue in the year of its inception (1994)was N8.194 billion, which was 36.5 percent greater than the projected N6 billion forthat year (Ajakaiye, 1999). However, the members of the organised private sectorhave been voicing their reservations in the sense that VAT is taking a toll on theprices of their products. From an economic point of view, one expects the price ofgoods subject to VAT to rise, however, beyond this expected rise, businesses aretaking advantage of the existence of VAT to increase prices of goods and servicesarbitrarily. According to Aruwa (2008), the resulting price increase has led to higherinflation. This may have prompted Mclure (1989) to state that policy makers shouldbe concerned about the macroeconomic impact of VAT, especially on prices,output, income and consumption, before considering its adoption.
A few empirical works on the subject exist in the context of the Nigerian economy.
Ajakaiye (1999) undertook the most detailed study for Nigeria, including anextensive investigation of the impact of VAT on key sectoral macroeconomicaggregates, by using a Computable General Equilibrium (CGE) model of theNigerian economy. Unfortunately, the study was carried out when VAT was only sixyears old in Nigeria, too early to get reliable conclusions on its impact on othermacroeconomic aggregates. Besides, from 1999 to date, the economicenvironment in Nigeria has undergone a number of changes. For instance, therewas a transition from a military to a democratic regime.
1.2 STATEMENT OF THE PROBLEM
In terms of contributions the total federal collection revenue, VAT revenue at the time of inception in 1994 was anticipated to be much larger, indicating that Nigeria then may soon join the growing list of developing countries here VAT contributes at least 20% of total government revenue . While the performance of VAT as a source of revenue in sub-Sahara Africa and Nigeria in particular is clearly encouraging, it remains difficult to find attempts to systematically asses the impact of VAT on these economies (Ajakaiye, 1999). Nevertheless, include (1989) opines policy makers considering the adoption of VAT should be interested in the macroeconomic impact, especially on price, output, income and consumption. Economically, one expect the price of VAT able goods to rise, however beyond this expected rise, business are taking advantage of the existence of VAT the increas4e price of goods and services arbitrarily. 13
The excessive price increase according to Aruwa (2008) has further led to higher inflation in Nigeria. Given the foregoing seeks to asses the macroeconomic impact at VAT on price level in Nigeria.
1.3 AIMS AND OBJECTIVES OF STUDY
The main aims and objective of the research work is to examine the effect of value added tax (VAT) on price stability in the Nigeria economy. Other specific objectives of the study include:
- To examine the effect price fluctuation on the economy of Nigeria
- To investigate on the roles of value added tax (VAT) in revenue generation for the federal government of Nigeria
- To investigate on the factors affecting the implementation of VAT in Nigeria
- To examine the effect of VAT on the consumer price index
- To proffer solution to the above stated problem.
1.4 RESEARCH QUESTIONS
- How does price fluctuation affect the economy of Nigeria?
- What roles do value added tax (VAT) play in revenue generation for the federal government of Nigeria?
- What are the factors affecting the implementation of VAT in Nigeria?
- What effect does VAT have on consumer price index?
1.5 RESEARCH HYPOTHESIS
H0: the implementation of VAT has no significant effect on price stability
H1: the implementation of VAT has significant effect on price stability
H0: there is no significant relationship between the implementation of value added tax and economic growth in Nigeria
H1: there is no significant relationship between the implementation of value added tax and economic growth in Nigeria
1.6 SIGNIFICANCE OF THE STUDY
Finding from the study will be of immense benefit to policy makers in assessing the performance of VAT on the stability of price level in Nigeria. Secondly, it will serves as a reservoir of knowledge for further studies.
1.7 SCOPE AND LIMITATION OF THE STUDY
The study intends to focus on the Nigeria economy with the period 1994 to 2015. The choice of range of period is informed by the fact that VAT policy implementation in Nigeria began by 1994. Quarterly data will be employed to extend the sample size, but where this is not available; we will have no choice than to use annual data for the study.
1.8 LIMITATION OF THE STUDY
Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).
Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.
1.9 DEFINITION OF TERMS
VAT: This is an Indirect tax on the domestic consumption of goods and services, except those that are zero-rated (such as food and essential drugs) or are otherwise exempt (such as exports).
Price Stability: This implies avoiding both prolonged inflation and deflation
You either get what you want or your money back. T&C Apply
You can find more project topics easily, just search
SIMILAR BUSINESS ADMINISTRATION FINAL YEAR PROJECT RESEARCH TOPICS
1. CAUSES AND EFFECTS OF INSECURITY IN NIGERIA: THE CHALLENGES AND RELEVANCE OF THE NIGERIAN POLICE FORCE AS A PANACEA» ( ABSTRACT This research work seeks to reveal the Causes and effects of insecurity in Nigeria and the challenges and relevance of the Nigerian police ...Continue Reading »
» ABSTRACT Total quality management, which is the practice of striving fore customer satisfaction by ensuring quality from all departments in an organiz...Continue Reading »
» CHAPTER ONE INTRODUCTION The practice of mixed economy appears to be global issue. Thus it is ever present in the economic and political system of mos...Continue Reading »
4. THE ROLE OF E-PAYMENT SYSTEM IN TACKLING CORRUPTION IN NIGERIAN PUBLIC SERVICE: A STUDY OF INTEGRATED PAYROLL AND PERSONNEL INFORMATION SYSTEM (2007...» ABSTRACT The main focus of any Public Establishment in Nigeria has been to provide quality service to the public devoid of corruption, at faster rate ...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 Background to the Study Over the years, public organizations have experienced gross monetary loss due to error and fraud,...Continue Reading »
6. THE USE OF INFORMATION AND COMMUNICATION TECHNOLOGY AS A VERITABLE TOOL FOR TAX ADMINISTRATION (A CASE STUDY OF THE KADUNA STATE BOARD OF INTERNAL RE...» CHAPTER ONE 1.1 INTRODUCTION Information and communication technology is often used as an extended synonym for information technology(IT), but is a mo...Continue Reading »
» CHAPTER ONEINTRODUCTION1.1 Background of the StudyTime management is at the core of labour productivity in any sector of the economy. Labour productiv...Continue Reading »
» ABSTRACTThis study examined the impact of dividend yield on stock prices of Nigerian banks; theimpact of earnings yield on stock prices of Nigeria ban...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND Banking and other financial institutions in Ghana play a critical role in building the economy through the pro...Continue Reading »
» CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF PROBLEM Every organisation whether profit oriented or not, has a set objectives which all the employees and...Continue Reading »