THE ANALYSIS OF VALUE ADDED TAX AND ITS IMPACT IN THE NIGERIAN ECONOMY
This study was carried out to analyze the value added tax (VAT) and its effect in the economy and to identify areas of shortcomings and to make recommendations for corrective measures. The scope of the study was limited to Enugu State. Data were collected based on these objectives: To assess the response of vatable person (taxpayer). To increase the awareness of vatable public. To assess the impact of value added tax on final consumers. To find out if significant correlation exist between VAT Revenue and GDP Literature reviewed from relevant texts and journals revealed that VAT has been exceeding its target revenue since commencement and that state government expenses have been cleared to some extent with VAT revenue. The study further revealed that VAT revenue is not tied to a specific capital project and that there is loophole in the VAT Decree under registration of taxable person. The study also showed that VAT has only added to the multiple tax system operational in Nigeria. And further revealed that VAT has the propensity to increase prices, deplete people’s finances and reduce their purchasing power; contribute to inflation and produce multiplier effects on all sectors of the economy including health. Furthermore, the study also revealed that VAT is a better option to other taxes and that tax-payer render returns promptly to the taxes authority. These finding were examined using descriptive survey, questionnaire and chi-square to test the hypothesis formed. A sample size of 40 was selected by simple random sampling. Data was analyzed and presented using percentages and chi-square, which gave rise to the findings. Based on the finding, recommendations and suggestions were made.