Analyzing the impact of value added tax (vat) on economic growth in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of value added tax (VAT) on economic growth in Nigeria from 1994 to 2010 using vector autoregression (VAR) modeling. The study uses quarterly time series data for GDP, VAT revenues, and oil revenues. Unit root tests show the variables contain unit roots and are non-stationary in levels but stationary in first differences. The VAR model is then estimated in levels to capture dynamic relationships between the variables. Impulse response functions and forecast error variance decompositions from the VAR imply that VAT has a positive impact on economic growth in Nigeria, accounting for about 50% of variations in real economic activity over time. The study concludes that Nigeria should continue implementing VAT policies to help
IMPACT OF TAX REVENUE ON ECONOMIC GROWTH IN RWANDA FROM 2007-2017.Nzabirinda Etienne
Rwanda is working tirelessly to achieve economic growth and development. Taxation effective is the one tool to promote and to accelerate economic growth and development, several studies analyses the impact of tax on economic growth and economic development.
The objective of this study is to investigate the impact of tax revenue on economic growth in Rwanda from 2007-2017. Secondary data were sourced from Rwanda Revenue Authority (RRA) and National Institute of statistics of Rwanda (NISR) for the period spanning from 2007Q1-2017Q4. Descriptive data analysis was used and the variable considered here are: Gross domestic product (GDP) as proxy for economic growth, direct tax (DT), Tax on goods and services (TGS) and Tax on international trade and transaction (TITT). Significant literature review for this study is available.
The results of the unit root and the co-integration tests revealed that all variables are integrated of order one, I(1) and Johensen cointegration test indicate existence of a long-run equilibrium relationship among variables included in the model and we use also Vector Error Correction Model (VECM) estimation method for data analysis to estimate for short run result. The empirical findings showed that direct tax(DT)and tax on goods and services(TGS) variables have positive at 0.1631 to 0.60 31 respectively impact on economic growth, while Tax on international trade and transactions(TITT) variable has negative at -0.005913 and it impacts on economic growth.
This study recommends that the policymakers within government of Rwanda must improve both direct tax and tax on goods and services (domestic tax) and increase Taxes on international trade transactions (customs duties), it will harm economic growth of Rwanda therefore custom duties must be rationally reduced or abolished and free trade zones like Africa continental free trade area (AfCFTA) must create to foster increased exchange of goods and services across borders.
Key Words: Tax Revenue, economic growth, Gross domestic product, direct tax, tax on goods and services, tax on international trade and transaction, VECM, Rwanda
Tax system in nigeria – challenges and the way forwardAlexander Decker
This document discusses challenges facing Nigeria's tax system. It outlines several key challenges: lack of statistical tax data, inability to prioritize tax efforts, poor tax administration due to understaffing and lack of training, and multiplicity of taxes. The document examines these challenges in more detail and argues that addressing these issues is important for establishing an efficient and effective tax regime in Nigeria.
An Assessment of revenue generation drive of Lagos state government through e...Jeremy Williams
Effective taxation is critical for generating government revenue but many nations struggle with administration and compliance issues. In Lagos State, low oil prices reduced funds, increasing the urgency of boosting internally generated revenue. This study examines how Lagos State improved tax administration and the impact on revenue, citizens, and development. It analyzes the state's efforts to transform its revenue base and infrastructure for its growing population through more efficient revenue collection.
Effect of vat and tax on economy an analysis in the context of bangladesh.Alexander Decker
This document summarizes a research paper on the effects of taxes and VAT on the economy of Bangladesh. It provides background on VAT and how it has replaced sales taxes in Bangladesh. It discusses the country's current tax policies, including income tax rates that are progressive up to 25% and a uniform 15% VAT rate. It analyzes how the tax system affects people in Bangladesh, noting the heavy reliance on indirect taxes results in a small number of taxpayers shouldering the burden. The narrow tax base and exemptions are also issues. In conclusion, broadening the tax base is desirable but agricultural income exemptions need reconsideration given many affluent people claim agricultural income to avoid taxes.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Analyzing the impact of value added tax (vat) on economic growth in nigeriaAlexander Decker
This document summarizes a study that analyzes the impact of value added tax (VAT) on economic growth in Nigeria from 1994 to 2010 using vector autoregression (VAR) modeling. The study uses quarterly time series data for GDP, VAT revenues, and oil revenues. Unit root tests show the variables contain unit roots and are non-stationary in levels but stationary in first differences. The VAR model is then estimated in levels to capture dynamic relationships between the variables. Impulse response functions and forecast error variance decompositions from the VAR imply that VAT has a positive impact on economic growth in Nigeria, accounting for about 50% of variations in real economic activity over time. The study concludes that Nigeria should continue implementing VAT policies to help
IMPACT OF TAX REVENUE ON ECONOMIC GROWTH IN RWANDA FROM 2007-2017.Nzabirinda Etienne
Rwanda is working tirelessly to achieve economic growth and development. Taxation effective is the one tool to promote and to accelerate economic growth and development, several studies analyses the impact of tax on economic growth and economic development.
The objective of this study is to investigate the impact of tax revenue on economic growth in Rwanda from 2007-2017. Secondary data were sourced from Rwanda Revenue Authority (RRA) and National Institute of statistics of Rwanda (NISR) for the period spanning from 2007Q1-2017Q4. Descriptive data analysis was used and the variable considered here are: Gross domestic product (GDP) as proxy for economic growth, direct tax (DT), Tax on goods and services (TGS) and Tax on international trade and transaction (TITT). Significant literature review for this study is available.
The results of the unit root and the co-integration tests revealed that all variables are integrated of order one, I(1) and Johensen cointegration test indicate existence of a long-run equilibrium relationship among variables included in the model and we use also Vector Error Correction Model (VECM) estimation method for data analysis to estimate for short run result. The empirical findings showed that direct tax(DT)and tax on goods and services(TGS) variables have positive at 0.1631 to 0.60 31 respectively impact on economic growth, while Tax on international trade and transactions(TITT) variable has negative at -0.005913 and it impacts on economic growth.
This study recommends that the policymakers within government of Rwanda must improve both direct tax and tax on goods and services (domestic tax) and increase Taxes on international trade transactions (customs duties), it will harm economic growth of Rwanda therefore custom duties must be rationally reduced or abolished and free trade zones like Africa continental free trade area (AfCFTA) must create to foster increased exchange of goods and services across borders.
Key Words: Tax Revenue, economic growth, Gross domestic product, direct tax, tax on goods and services, tax on international trade and transaction, VECM, Rwanda
Tax system in nigeria – challenges and the way forwardAlexander Decker
This document discusses challenges facing Nigeria's tax system. It outlines several key challenges: lack of statistical tax data, inability to prioritize tax efforts, poor tax administration due to understaffing and lack of training, and multiplicity of taxes. The document examines these challenges in more detail and argues that addressing these issues is important for establishing an efficient and effective tax regime in Nigeria.
An Assessment of revenue generation drive of Lagos state government through e...Jeremy Williams
Effective taxation is critical for generating government revenue but many nations struggle with administration and compliance issues. In Lagos State, low oil prices reduced funds, increasing the urgency of boosting internally generated revenue. This study examines how Lagos State improved tax administration and the impact on revenue, citizens, and development. It analyzes the state's efforts to transform its revenue base and infrastructure for its growing population through more efficient revenue collection.
Effect of vat and tax on economy an analysis in the context of bangladesh.Alexander Decker
This document summarizes a research paper on the effects of taxes and VAT on the economy of Bangladesh. It provides background on VAT and how it has replaced sales taxes in Bangladesh. It discusses the country's current tax policies, including income tax rates that are progressive up to 25% and a uniform 15% VAT rate. It analyzes how the tax system affects people in Bangladesh, noting the heavy reliance on indirect taxes results in a small number of taxpayers shouldering the burden. The narrow tax base and exemptions are also issues. In conclusion, broadening the tax base is desirable but agricultural income exemptions need reconsideration given many affluent people claim agricultural income to avoid taxes.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
An evaluation of the contribution of value added tax (vat) to resource mobili...Alexander Decker
This document evaluates the contribution of Value Added Tax (VAT) to resource mobilization in Nigeria. It finds that VAT has significantly contributed to resource mobilization and capital formation based on regression analyses showing strong positive relationships between VAT and key economic indicators like Real Gross Domestic Product, Current Revenue, and Internal Revenue. The analyses show VAT individually and significantly impacts these indicators based on t-statistic and F-statistic tests. It concludes that VAT is an ideal form of taxation in Nigeria's tax system and has become more important as a source of government revenue.
Determinants of tax compliance behavior in ethiopia the case of bahir dar cit...Alexander Decker
This document examines the determinants of tax compliance behavior in Ethiopia, specifically in Bahir Dar City. It used a survey of 201 taxpayers to analyze factors like perception of government spending, fairness of the tax system, penalties, financial constraints, policy changes, and social influences. The results found that these factors significantly affected tax compliance, but gender and audit probability did not. Additionally, older taxpayers were found to comply less if they felt the tax system was unfair or recent policy changes were unfavorable. In summary, it identified several perceptual and situational factors that influence tax compliance in Bahir Dar City, though not demographic factors like gender.
This document summarizes a research paper that studied the influence of taxpayer awareness and tax morale on tax evasion in Bandung, Indonesia. The study used a survey questionnaire to collect data from 436 taxpayers. It analyzed the data using path analysis and found that both taxpayer awareness and tax morale partially and simultaneously had a significant negative effect on tax evasion. The study concluded that increasing taxpayer awareness and tax morale can reduce levels of tax evasion.
IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN N IGERIAIyanda Abdulwasiu
This document is a research project on the impact of personal income tax on revenue generation in Nigeria, using Lagos Government as a case study. It was submitted by Iyanda Abdulwasiu Ahmed to the Department of Accountancy at Kwara State Polytechnic in partial fulfillment of the requirements for a National Diploma in Accountancy. The research project contains certification, dedication, acknowledgements, table of contents, and 5 chapters that discuss the background of the study, literature review, research methodology, data analysis and findings, and conclusions and recommendations.
An investigation of the effect of vat on revenue profiles of south western ni...Alexander Decker
This document summarizes a study that examined the effect of Value Added Tax (VAT) on the revenue profiles of state governments in Southwestern Nigeria from 2002 to 2011. The study used secondary data from approved budgets of five states. Panel regression analysis found that VAT had a positive and significant relationship with state revenues. The study concluded that increasing consumption through poverty alleviation could increase VAT revenues for states by boosting the goods and services subject to VAT.
FACTORS AFFECTING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN KITALE...paperpublications3
Abstract:This study seeks to establish factors affecting tax compliance by Small and Medium Enterprises, with special emphasis on Income Tax and Value Added Tax and their effects on government revenue. Tax compliance level which is internal factor affecting tax revenue not only undermines tax administration infrastructure but also makes the tax base narrow and inequitable. The objectives of the study include establishing the influence of compliance cost, fines and penalties and attitudes of tax compliance among Small and Medium Enterprises. The study adopts a descriptive research design involving both qualitative and quantitative research methodology. The target population was 200, out of which a sample size of 132 respondents were drawn, using stratified and simple random sampling. Questionnaires were used to collect primary data from the respondents, which were analyzed using SPSS applying both descriptive and inferential analysis. There was a positive relationship between the tax and compliance cost (r=.514), fines and penalties (r=.415) attitudes (r=.546) and tax compliance. The findings showed that compliance cost, fines and penalties and attitude had significant relationship with tax compliance. It is recommended that the tax system should provide a clear and simple guideline on how to fill tax returns but also enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers, there should be moderate levels of fines and taxes so that SMEs are encouraged to comply since they will keep accurate records for taxation purposes in order to avoid fines and penalties.
Keywords: Direct tax, Indirect tax, Medium enterprise, Productive expenditure, tax evasion, tax impact.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Position paper domestic revenue mobilizationSalia Adamu
This paper is targets the Government revenue authorities and finding innovative ways of raising revenue through the informal sector workers. All the revenue agencies are intensifying more revenue collection through old tax collection methods. This is done usually through the easy ways of PAYE, VAT and corporate taxes collection. The informal sector worker which account for 70% of the workforce are the least targeted for taxation. In view of growing public expenditure and reduction in annual budgetary support from development partners, there is the need to intensify domestic revenue generation through innovative strategies and capturing more informal sector workers.
Analysis of tax morale and tax compliance in nigeriaAlexander Decker
This document analyzes tax morale and tax compliance in Nigeria. It discusses how tax morale, or the intrinsic motivation to pay taxes, affects tax compliance. The study aims to determine the effect of tax morale on taxpayers' compliance with tax policies in Nigeria. It reviews literature on factors that influence tax compliance, such as trust in government, social and cultural norms, and confidence in the legal system. The document presents theories on intrinsic motivation, ipsative possibilities, and deterrence to explain tax morale and compliance. It provides context on Nigeria's tax system and history of taxation. The results of the study showed relationships between tax compliance and factors like tax morale, trust in government, and social/cultural norms. It recommends strengthening taxpayer services and
ax Evasion is a illegal way of reducing tax. Developing countries like Bangladesh loses huge amount of taxes because of tax Evasion. Government loses about 2 billion taxes from Multinational industries in Bangladesh. It is said that 200 multinational companies have been working in Bangladesh.
The document provides an introduction to a study on tax evasion in Bangladesh. It begins by outlining how developing countries like Bangladesh face challenges in establishing effective tax systems compared to developed countries. This leads to issues like tax evasion that reduce the amount of revenue collected.
The document then notes that tax is the primary source of government revenue in Bangladesh but there remains a gap between expenditures and tax collections. This gap has increased in recent years despite rising tax revenues. One major reason for this is tax evasion among taxpayers.
Finally, it provides the background, objectives and limitations of the study, which aims to identify factors influencing tax evasion in Bangladesh and find solutions to reduce it. The study collects secondary data from various
Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)ijtsrd
This paper investigated the effect of taxes on revenue generation in Nigeria from 1981 to 2016, a period of thirty five 35 years and the data for the analysis were sourced from Central Bank of Nigeria's CBN, 2016 Statistical Bulletin. The variables used include total federally collected revenue as a proxy for revenue generation, labour, gross capital formation, company income tax, petroleum profit tax, personal income tax, value added tax, custom and excise tax, direct tax and indirect tax. Fully modified ordinary least squares method FMOLS was employed to determine the direction and the magnitude of impacts. Based on the effect of direct tax on revenue generation in Nigeria, both company income tax and personal income tax boost revenue generation in Nigeria while petroleum profit tax discourage revenue generation in Nigeria. Also, model on the effect of indirect tax on revenue generation showed that the two variables used as indirect tax variable value added tax and custom and excise tax have positive and significant effect on revenue generation in Nigeria. Lastly, the researchers found out that the estimated result on the effect of direct and indirect tax on revenue generation in Nigeria showed that indirect tax lead to revenue generation in Nigeria while direct tax does not and this is so because most people pay indirect tax in Nigeria than direct tax. Also, tax evasion and avoidance are very minimal in indirect tax and this lead to more revenue which encourage economic growth in Nigeria. The researchers recommended that it is important that efficient and effective tax policy be implemented to ensure that enough revenue is generated for growth purposes like strict penalties should be meted to people who avoid and evade tax payments. Government should base her taxes on indirect tax because this will not create any burden on the citizen and in this way, it will lead to growth. Olaleye John Olatunde | Salome Olabimpe Ajayi "Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-1 , December 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29514.pdfPaper URL: https://www.ijtsrd.com/economics/other/29514/impact-of-taxes-on-revenue-generation-in-nigeria-a-study-of-federal-government/olaleye-john-olatunde
General Perception of Self Employed Nigerian on Tax Aviodance and Evasion A S...ijtsrd
This document summarizes a study on tax avoidance and evasion among self-employed Nigerians. The study examined literature and administered questionnaires in Anambra and Delta States. Results found that respondents felt tax evasion was sometimes ethical and there was a significant relationship between cultural practices, views on tax administration, and tax avoidance/evasion. It was recommended that tax rates be reviewed regularly, authorities be accountable, and assistance be provided to self-employed taxpayers. In general, the document discusses the problem of tax avoidance and evasion in Nigeria, how it reduces government revenues and hinders development, and the need to investigate perceptions that drive these practices.
Tanzania Revenue Authority PresentationApollo Temu
The document discusses tax administration reforms in Tanzania and how the Tanzanian diaspora can contribute to development. It outlines Tanzania Revenue Authority's (TRA) reforms to modernize operations and increase voluntary tax compliance. TRA collects taxes through improved ICT systems. The document also details how the diaspora can send duty-exempt goods to qualifying organizations in Tanzania to support poverty alleviation and development projects.
India Budget 2018 ...Changing Landscape - An Analysis by K. C. Mehta & Co.Prashant Kotecha
This document provides an overview and summary of the key aspects of the Indian economy based on the Economic Survey of 2017-18. Some of the main points covered in the 3 sentences are:
1) The Economic Survey analyzed the Indian economy using big data from sources like GST, EPFO, ESIC to provide new perspectives on economic indicators and issues like the gender gap.
2) Key findings included that over 30% of non-agricultural jobs were in the formal sector based on social security enrollment, states' prosperity correlated more strongly with international trade than domestic trade, and the agricultural sector is becoming more feminized.
3) The document also summarizes fiscal trends like tax revenue growth and deficits,
Taxation, Private Fixed Domestic investment Behaviour and Zimbabwe’s Economic...AJHSSR Journal
This document summarizes a research paper that examines the relationship between taxation, private fixed domestic investment, and economic growth in Zimbabwe from 1998 to 2015. The paper finds that taxation revenue channeled towards productive public expenditures like infrastructure can stimulate private investment. However, Zimbabwe's high taxes have discouraged savings and investment, despite evidence that taxes can be efficient and equitable when properly implemented. The primary challenge for policymakers is devising tax rules that lower evasion and corruption while adequately protecting the tax base and lessening the burden on firms.
Pakistan's current tax system is inefficient and inequitable, mobilizing insufficient revenue to adequately fund public services for the poor. It relies too heavily on indirect taxes that disproportionately burden the poor. Reforms are needed to broaden the direct tax base, reduce indirect taxes, ensure all sectors contribute fairly, and improve tax administration. These changes could strengthen domestic revenue, increase equity, and boost development outcomes.
Functional Tax Governance Apparatus and Economic DevelopmentDr. Amarjeet Singh
The proportion of tax earnings to gross domestic
product (GDP) in Nigerian economy had been ranked and
affirmed the least in the sub-Sahara African and as
evolving economy, different reasons attested to this fact,
hence, the study is aimed at investigate the inherent lacuna
of tax governance apparatus in responses to economic
development as broad objective. The study employed field
research design, the research instrument that was deployed
for collection of data is purposive and structured
questionnaire targeted at elicit information from relevant
and related stakeholders in tax matters, the research
instrument and data collected were subjected to Cronbach
alpha test and heteroscedasticity test to affirm the
validity/reliability and best linear unbiased estimator of
data collected respectively. The result revealed that the
responsiveness of economic development to tax assessment,
tax policy and tax administration were statistically
significant inversely related while tax collection was
statistically insignificant related directly with economic
development. Thereby study concluded that poor
management and administration of tax system in Nigeria
responsible for adverse relationship that subsist between
the proportion of tax earnings to GDP and resulted
decayed and declined physical infrastructures and socioeconomic development.
An evaluation and forecast of the impact of foreign direct investment in nige...Alexander Decker
This document summarizes an empirical analysis of vertical imbalance in revenue distribution in Nigeria between 1985-2010. Data from the Central Bank of Nigeria and National Bureau of Statistics was analyzed. The findings showed an inverse relationship between vertical imbalance at the state level (VIMBs) and uneven economic development (UNED), but a direct positive relationship between vertical imbalance at the federal level (VIMBf) and UNED. This suggests the federal government has a wider coverage of revenue generation than states. The analysis found VIMBs was not statistically significant in predicting UNED, while VIMBf was significant. It is recommended that efforts be made to regulate revenue distribution policies to better reflect federalism and development implementation.
Tax Justice: The Domestic Perspective - A Synthesis of Studies of the Tax Sys...Dr Lendy Spires
This document discusses tax systems in five developing countries: Cambodia, Kenya, Nepal, Nigeria, and Tanzania. It finds that:
1) Tax revenue as a percentage of GDP has increased 3-5% over the last decade in all five countries, though they remain below the 20% target.
2) Dependence on foreign aid has decreased significantly in three countries as domestic revenue has increased faster than aid.
3) Indirect taxes make up a larger share of revenue than direct taxes in most countries, though direct tax shares are rising over time as economies develop.
Effectiveness of internal auditor in controlling fraud and other financial ir...Alexander Decker
This study examined the effectiveness of internal auditors in controlling fraud and other financial irregularities in private universities in Southwest Nigeria. It evaluated the relevance of internal audit reports in exposing financial fraud and examined the effectiveness of auditing in detecting fraud. Regression analysis showed that internal auditors were effective in controlling fraud. Additionally, internal audit reports were found to be relevant in exposing various means of financial fraud. The study concluded that internal auditors can effectively expose fraud in private universities if allowed to perform their duties, and that auditing is an appropriate way to detect fraud and irregularities. It recommended that private universities implement strong internal controls and effective internal audit functions headed by qualified accountants.
Value added tax (VAT) is a consumption tax levied on the added value at each stage of production. VAT is widely used in European countries and is an important source of government revenue. The document defines VAT, describes how it is calculated using the addition, subtraction, and credit methods, and outlines the four phase process for implementing VAT. It also provides details on VAT rates and implementation in Macedonia and the European Union. In conclusion, VAT has been adopted by many countries as an effective indirect tax system.
An evaluation of the contribution of value added tax (vat) to resource mobili...Alexander Decker
This document evaluates the contribution of Value Added Tax (VAT) to resource mobilization in Nigeria. It finds that VAT has significantly contributed to resource mobilization and capital formation based on regression analyses showing strong positive relationships between VAT and key economic indicators like Real Gross Domestic Product, Current Revenue, and Internal Revenue. The analyses show VAT individually and significantly impacts these indicators based on t-statistic and F-statistic tests. It concludes that VAT is an ideal form of taxation in Nigeria's tax system and has become more important as a source of government revenue.
Determinants of tax compliance behavior in ethiopia the case of bahir dar cit...Alexander Decker
This document examines the determinants of tax compliance behavior in Ethiopia, specifically in Bahir Dar City. It used a survey of 201 taxpayers to analyze factors like perception of government spending, fairness of the tax system, penalties, financial constraints, policy changes, and social influences. The results found that these factors significantly affected tax compliance, but gender and audit probability did not. Additionally, older taxpayers were found to comply less if they felt the tax system was unfair or recent policy changes were unfavorable. In summary, it identified several perceptual and situational factors that influence tax compliance in Bahir Dar City, though not demographic factors like gender.
This document summarizes a research paper that studied the influence of taxpayer awareness and tax morale on tax evasion in Bandung, Indonesia. The study used a survey questionnaire to collect data from 436 taxpayers. It analyzed the data using path analysis and found that both taxpayer awareness and tax morale partially and simultaneously had a significant negative effect on tax evasion. The study concluded that increasing taxpayer awareness and tax morale can reduce levels of tax evasion.
IMPACT OF PERSONAL INCOME TAX ON REVENUE GENERATION IN N IGERIAIyanda Abdulwasiu
This document is a research project on the impact of personal income tax on revenue generation in Nigeria, using Lagos Government as a case study. It was submitted by Iyanda Abdulwasiu Ahmed to the Department of Accountancy at Kwara State Polytechnic in partial fulfillment of the requirements for a National Diploma in Accountancy. The research project contains certification, dedication, acknowledgements, table of contents, and 5 chapters that discuss the background of the study, literature review, research methodology, data analysis and findings, and conclusions and recommendations.
An investigation of the effect of vat on revenue profiles of south western ni...Alexander Decker
This document summarizes a study that examined the effect of Value Added Tax (VAT) on the revenue profiles of state governments in Southwestern Nigeria from 2002 to 2011. The study used secondary data from approved budgets of five states. Panel regression analysis found that VAT had a positive and significant relationship with state revenues. The study concluded that increasing consumption through poverty alleviation could increase VAT revenues for states by boosting the goods and services subject to VAT.
FACTORS AFFECTING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN KITALE...paperpublications3
Abstract:This study seeks to establish factors affecting tax compliance by Small and Medium Enterprises, with special emphasis on Income Tax and Value Added Tax and their effects on government revenue. Tax compliance level which is internal factor affecting tax revenue not only undermines tax administration infrastructure but also makes the tax base narrow and inequitable. The objectives of the study include establishing the influence of compliance cost, fines and penalties and attitudes of tax compliance among Small and Medium Enterprises. The study adopts a descriptive research design involving both qualitative and quantitative research methodology. The target population was 200, out of which a sample size of 132 respondents were drawn, using stratified and simple random sampling. Questionnaires were used to collect primary data from the respondents, which were analyzed using SPSS applying both descriptive and inferential analysis. There was a positive relationship between the tax and compliance cost (r=.514), fines and penalties (r=.415) attitudes (r=.546) and tax compliance. The findings showed that compliance cost, fines and penalties and attitude had significant relationship with tax compliance. It is recommended that the tax system should provide a clear and simple guideline on how to fill tax returns but also enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers, there should be moderate levels of fines and taxes so that SMEs are encouraged to comply since they will keep accurate records for taxation purposes in order to avoid fines and penalties.
Keywords: Direct tax, Indirect tax, Medium enterprise, Productive expenditure, tax evasion, tax impact.
International Journal of Humanities and Social Science Invention (IJHSSI)inventionjournals
International Journal of Humanities and Social Science Invention (IJHSSI) is an international journal intended for professionals and researchers in all fields of Humanities and Social Science. IJHSSI publishes research articles and reviews within the whole field Humanities and Social Science, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online.
Position paper domestic revenue mobilizationSalia Adamu
This paper is targets the Government revenue authorities and finding innovative ways of raising revenue through the informal sector workers. All the revenue agencies are intensifying more revenue collection through old tax collection methods. This is done usually through the easy ways of PAYE, VAT and corporate taxes collection. The informal sector worker which account for 70% of the workforce are the least targeted for taxation. In view of growing public expenditure and reduction in annual budgetary support from development partners, there is the need to intensify domestic revenue generation through innovative strategies and capturing more informal sector workers.
Analysis of tax morale and tax compliance in nigeriaAlexander Decker
This document analyzes tax morale and tax compliance in Nigeria. It discusses how tax morale, or the intrinsic motivation to pay taxes, affects tax compliance. The study aims to determine the effect of tax morale on taxpayers' compliance with tax policies in Nigeria. It reviews literature on factors that influence tax compliance, such as trust in government, social and cultural norms, and confidence in the legal system. The document presents theories on intrinsic motivation, ipsative possibilities, and deterrence to explain tax morale and compliance. It provides context on Nigeria's tax system and history of taxation. The results of the study showed relationships between tax compliance and factors like tax morale, trust in government, and social/cultural norms. It recommends strengthening taxpayer services and
ax Evasion is a illegal way of reducing tax. Developing countries like Bangladesh loses huge amount of taxes because of tax Evasion. Government loses about 2 billion taxes from Multinational industries in Bangladesh. It is said that 200 multinational companies have been working in Bangladesh.
The document provides an introduction to a study on tax evasion in Bangladesh. It begins by outlining how developing countries like Bangladesh face challenges in establishing effective tax systems compared to developed countries. This leads to issues like tax evasion that reduce the amount of revenue collected.
The document then notes that tax is the primary source of government revenue in Bangladesh but there remains a gap between expenditures and tax collections. This gap has increased in recent years despite rising tax revenues. One major reason for this is tax evasion among taxpayers.
Finally, it provides the background, objectives and limitations of the study, which aims to identify factors influencing tax evasion in Bangladesh and find solutions to reduce it. The study collects secondary data from various
Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)ijtsrd
This paper investigated the effect of taxes on revenue generation in Nigeria from 1981 to 2016, a period of thirty five 35 years and the data for the analysis were sourced from Central Bank of Nigeria's CBN, 2016 Statistical Bulletin. The variables used include total federally collected revenue as a proxy for revenue generation, labour, gross capital formation, company income tax, petroleum profit tax, personal income tax, value added tax, custom and excise tax, direct tax and indirect tax. Fully modified ordinary least squares method FMOLS was employed to determine the direction and the magnitude of impacts. Based on the effect of direct tax on revenue generation in Nigeria, both company income tax and personal income tax boost revenue generation in Nigeria while petroleum profit tax discourage revenue generation in Nigeria. Also, model on the effect of indirect tax on revenue generation showed that the two variables used as indirect tax variable value added tax and custom and excise tax have positive and significant effect on revenue generation in Nigeria. Lastly, the researchers found out that the estimated result on the effect of direct and indirect tax on revenue generation in Nigeria showed that indirect tax lead to revenue generation in Nigeria while direct tax does not and this is so because most people pay indirect tax in Nigeria than direct tax. Also, tax evasion and avoidance are very minimal in indirect tax and this lead to more revenue which encourage economic growth in Nigeria. The researchers recommended that it is important that efficient and effective tax policy be implemented to ensure that enough revenue is generated for growth purposes like strict penalties should be meted to people who avoid and evade tax payments. Government should base her taxes on indirect tax because this will not create any burden on the citizen and in this way, it will lead to growth. Olaleye John Olatunde | Salome Olabimpe Ajayi "Impact of Taxes on Revenue Generation in Nigeria (A Study of Federal Government)" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-4 | Issue-1 , December 2019, URL: https://www.ijtsrd.com/papers/ijtsrd29514.pdfPaper URL: https://www.ijtsrd.com/economics/other/29514/impact-of-taxes-on-revenue-generation-in-nigeria-a-study-of-federal-government/olaleye-john-olatunde
General Perception of Self Employed Nigerian on Tax Aviodance and Evasion A S...ijtsrd
This document summarizes a study on tax avoidance and evasion among self-employed Nigerians. The study examined literature and administered questionnaires in Anambra and Delta States. Results found that respondents felt tax evasion was sometimes ethical and there was a significant relationship between cultural practices, views on tax administration, and tax avoidance/evasion. It was recommended that tax rates be reviewed regularly, authorities be accountable, and assistance be provided to self-employed taxpayers. In general, the document discusses the problem of tax avoidance and evasion in Nigeria, how it reduces government revenues and hinders development, and the need to investigate perceptions that drive these practices.
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India Budget 2018 ...Changing Landscape - An Analysis by K. C. Mehta & Co.Prashant Kotecha
This document provides an overview and summary of the key aspects of the Indian economy based on the Economic Survey of 2017-18. Some of the main points covered in the 3 sentences are:
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data collected respectively. The result revealed that the
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tax policy and tax administration were statistically
significant inversely related while tax collection was
statistically insignificant related directly with economic
development. Thereby study concluded that poor
management and administration of tax system in Nigeria
responsible for adverse relationship that subsist between
the proportion of tax earnings to GDP and resulted
decayed and declined physical infrastructures and socioeconomic development.
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- VAT was first introduced in France in 1954 and has since been adopted by many countries including India where it was introduced in 2005.
- Under VAT, tax is collected in installments at each stage of production/distribution rather than just at the final retail point like under sales tax. This avoids cascading of taxes.
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Vat revenue and state investment spending in nigeria, 1994 2010.Alexander Decker
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Government Health Spending and Tax Reform in Rwanda, 2000-2013 – A Case StudyHFG Project
Rwanda provides an example of a country that has been committed to improving both its tax and health systems. Moreover, Rwanda has recognized the critical linkage between domestic resource mobilization and sustainable economic development, including increasing public financing for health.
Determinants of Tax Compliances among SMEs in Mwanza RegionAI Publications
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American Journal of Multidisciplinary Research and Development is indexed, refereed and peer-reviewed journal, which is designed to publish research articles.
This document discusses a study that examines the issues and implications of implementing Value Added Tax (VAT) on e-transactions in Nigeria. The study aims to identify the challenges of implementing VAT on e-transactions and assess its potential effects. Some key challenges identified include out-of-date tax legislation, poor enforcement of existing laws, corruption, infrastructural limitations, technological complexity of e-transactions, and potential for double taxation. The empirical study analyzes survey responses from tax authorities, practitioners, and e-commerce stakeholders on these issues.
This study used error correction model (ECM) to analyse the causality between Value Added Tax (VAT) and the Nigerian Economy proxied by GDP during the period 1994-2015. The data such as VAT and GDP were obtained from Central Bank of Nigeria (CBN) statistical bulletin and Federal Inland Revenue Services (FIRS). The results of the findings revealed that VAT exerts positive and significant influence on GDP while there was evidence of unidirectional causality running from VAT to GDP. Therefore, the researchers recommend that in order to enhance economic growth of Nigeria through VAT revenue, there is need to plug all the lapses identified in tax administration and educate the tax administrators as well as the entire populace on the relevant of VAT revenue to the economy.
The document discusses the role of taxation in development. Taxation is the biggest source of funding for governments and can be used to reduce inequality and spur infrastructure development. However, Bangladesh's tax-to-GDP ratio of 12% is lower than developing countries which average 15-25%. While Bangladesh's GDP and fiscal expenditure are growing, tax revenue relies too heavily on a few large taxpayers and corruption hinders broader tax collection. Reforms are needed to modernize Bangladesh's tax administration system and encourage more taxpayers.
The document discusses the role of taxation in development. Taxation provides a major source of funding for government development activities. For developed countries, the tax to GDP ratio is above 25% while for developing countries like Bangladesh it is between 15-25%, currently at 12%. While Bangladesh GDP has grown, its tax revenue has also increased but mainly comes from a few large companies. The document calls for reforms in Bangladesh's tax administration system to expand the tax base and reduce corruption in order to increase tax collection and better fund development.
Relationship between foreign trade deficit and special consumption tax revenu...Alexander Decker
This document analyzes the relationship between foreign trade deficits and special consumption tax revenues in Turkey from 2006-2013. It finds that while neither time series was stationary, there is a bidirectional causal relationship between the two variables using the Toda-Yamamoto causality analysis method. The document provides background on Turkey's foreign trade deficits, outlines the theoretical framework for analyzing the relationship between deficits and special consumption taxes, and presents data on trade balances, tax revenues, and growth rates to support the empirical analysis finding a bidirectional causal link.
Relationship between foreign trade deficit and special consumption tax revenu...Alexander Decker
This document analyzes the relationship between foreign trade deficits and special consumption tax revenues in Turkey between 2006-2013. It finds that while neither time series was stationary, there is a bidirectional causal relationship between the two variables using the Toda-Yamamoto causality analysis method. The document provides background on Turkey's foreign trade deficits, outlines the theoretical framework for analyzing the relationship between deficits and special consumption taxes, and presents data on trade balances, tax revenues, and growth rates over the study period.
FACTORS AFFECTING TAX COMPLIANCE AMONG SMALL AND MEDIUM ENTERPRISES IN KITALE...paperpublications3
Abstract:This study seeks to establish factors affecting tax compliance by Small and Medium Enterprises, with special emphasis on Income Tax and Value Added Tax and their effects on government revenue. Tax compliance level which is internal factor affecting tax revenue not only undermines tax administration infrastructure but also makes the tax base narrow and inequitable. The objectives of the study include establishing the influence of compliance cost, fines and penalties and attitudes of tax compliance among Small and Medium Enterprises. The study adopts a descriptive research design involving both qualitative and quantitative research methodology. The target population was 200, out of which a sample size of 132 respondents were drawn, using stratified and simple random sampling. Questionnaires were used to collect primary data from the respondents, which were analyzed using SPSS applying both descriptive and inferential analysis. There was a positive relationship between the tax and compliance cost (r=.514), fines and penalties (r=.415) attitudes (r=.546) and tax compliance. The findings showed that compliance cost, fines and penalties and attitude had significant relationship with tax compliance. It is recommended that the tax system should provide a clear and simple guideline on how to fill tax returns but also enhance taxpayer education services to enable the taxpayers understand their rights and obligations as taxpayers, there should be moderate levels of fines and taxes so that SMEs are encouraged to comply since they will keep accurate records for taxation purposes in order to avoid fines and penalties.
Effect of Tax Reforms on Corporate on Nigerian Economic Developmentijtsrd
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Value added tax as a tool for national development in ethiopia
1. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.5, No.15, 2014
Value Added Tax as a Tool for National Development in Ethiopia
Dasalegn Mosissa Jalata
Lecturer Department of Accounting and Finance, College of Business and Economics, Wollega University
Post Box No: 395, Nekemte, Ethiopia
Email: dasseef@yahoo.com
Abstract
Ethiopia aspires to be a middle income country by 2020. And to meet such aspiration, sufficient amount of
revenue is required for the purpose of social, economic and political development. Ever since 2002, the
Ethiopian governments have tended to continue its taxing reform package with targets for attaining such outlined
issues. To that extent, replacement of the outdated sales tax that operated for about four decades with that of
Value added tax (VAT) is one of the main pillars and land mark of such reform. This paper therefore discusses
how VAT becomes a tool for national development in Ethiopian context from its adoptions (2003) to 2012.
Consequently,the OLS method is applied to investigate the relationship between VAT and national development
in terms of GDP. In doing so, the annual quantitative time seriessecondary data sourced from the Ethiopian
Revenue and Custom Authority (ERCA), Ministry of Finance and Economic Development (MOFED), and
Ethiopian Economic Associations (EEA) was employed. This research work is both descriptive and inferential in
nature that analyzed by both SPSS statistical package version 20.0 and Stata/SE version 11.0. The descriptive
finding revealed that,after the adoptions of VAT, the GDP growth rate alarmingly increased and reached about
21.9% on average and the average ratio of VAT revenue to that of GDP was 2.95%, while the growth rates of
VAT itself was 66.27% on average. In addition to that, the OLS findings showed as the Ethiopian National
development is significantly influenced by the VAT revenue with β1 of 23.500. So, the study concluded that
VAT revenue plays an energetic role for the national development of Ethiopia and it enables to succeed the
current growth and transformation plan (GTP) of the country.Therefore the paper recommends that the Ethiopian
government should make a full-fledged effort to efficiently collect and effectively utilize such tax revenue
through closing the door to corruptions and creating harmonized cooperation’s at different levels which can be
possible through making the VAT administrations more fashionable than ever before.
Keywords: Value Added Tax (VAT), National Development, Gross Domestic Products (GDP), Ethiopia
1. INTRODUCTION
Every country of the world wants to generate large amount of revenue to boost their level of Economic growth
and national development. This is because of that both the government and revenue were hand and glove or they
are the two sides of one coin as there is no government without enactments of different revenues.
From unenlightened period to date, it is totally agreeable among the opposition parties and the
followers of the higher authority’s policy that the government should take some amount of money from its
citizens as far as it is fair and based on their ability to contribute to undertake the necessary social welfare,
political and economic activities for its country. The reason is that, if the government has no revenue, there is no
infrastructural achievement in rural, semi-urban and urban areas. Particularly in the countries where most of the
populations live in the rural areas like Ethiopia, the profit seeker and risk antipathetic private investor were not
willing to invest as infrastructures such as asphalt road, electric power, and clean water were scarce in such areas.
Hence, it is the responsibility of government to facilitate such affordable infrastructure by its own involvement
and enhances the living standards of its citizens.
While doing its daily activities of both administrative issues and expenditures for capital
infrastructures, the government needs much amount of revenue that can be obtained from different sources. And
the most important sources of revenue for the government were tax revenue though there are other non-tax
revenue sources. To that extent, the government of different countries including; underdeveloped, developing,
transitional and developed countries of the world undertakes many tax reform efforts that boosts their revenue
through reducing the costs they incurred while adopting, collecting, implementing and administering such taxing
system. And that is why Value added tax as one type of taxing system was developed in the early 20th century.
Being introduced in France by 1954 as Taxe Sur la ValeurAdjoutee, Value added tax (henceforth VAT)
has currently banquet over enormous countries of the world. To that extent, all developed and developing
countries of the world with the exceptions of some countries has accepted VAT as their modern taxing system.In
the words of Charlet&Butdens (2012), limited to less than ten countries in the late 1960s, VAT has now been
implemented by more than 150 countries throughout the world. Among 53 members of African Union Countries,
34 (64%) of them have currently adopted VAT system. And while, Cote d’Ivore was the first country adopted
VAT in 1960, Angola was the recent country who adopted VAT in 2008 from the continent of Africa (Abate,
2011).
184
2. Research Journal of Finance and Accounting www.iiste.org
ISSN 2222-1697 (Paper) ISSN 2222-2847 (Online)
Vol.5, No.15, 2014
Ethiopia aspires to be a middle income country by 2020. To meet such aspiration, sufficient amount of
revenue is required for the purpose of social, economic and political aspects. That is why Ethiopia reforms her
taxing system in 2002 and the outcome of which makes replacement of the outdated sales tax that have
undertaken for about four decades without meeting the required agendas for which it is invented with that of
VAT. By such land mark of tax reform,Ethiopia adopted VAT as her consumption taxing system by January,
2003 issuing proclamation No 285/2002. While reviewing the styles of VAT adopted in Ethiopia, Jalata, (2014)
shows the existence of four main intentions for the adoptions of VAT in the Ethiopian context including;raising
large amount of revenue as the engine and tool of national development, to redistribute income and wealth
among members of the community residing in a state, for fulfillment of the WTO agreement and to implement
the IMF directions.
The concept of VAT is on its infancy age for our globe as it is familiarized not more than half century
ago. Hence, the adoption of VAT in Ethiopian context has specially been witnessed and well-known during the
recent years. Due to that reason, there are no many empirical evidences that demonstrate the appropriateness of
VAT as a tool for national development. To that extent, it is not clear as VAT plays its best effort to enhance the
national development or it may runs against national development of the developing countries in general or
Ethiopian context in particular. Therefore, the present paper is significant in the way that, it has an intention to
fill the limited available literature on the subject area as there is no comprehensive research conducted on the
role of VAT as a tool for national development in Ethiopian context from its adoption in 2003 to 2012.And
hence,this paper will add the knowledge on the limited available literature and it will renew the consciousness of
government and citizens on the effective use of VAT as a developmental tool, and examine the impact VAT
have on national development so far in developing countries and Ethiopian context in particular.
2. REVIEW OF LITERATURES
For many countries, VAT replaces some alternative taxing system such as sales tax or turnover tax though some
countries may invent VAT as a new mechanism without replacing any previous taxing system. VAT converts the
distortionary concepts of its alternative taxes in to less distortionary as it is collected from stages to stage with a
minimum amount and there is no tax evasion as it is applied on the price of goods and services to be sold and
purchased. The VAT only applied on the amount of value added throughout the passage of goods and services
from one stage to another, it makes the burden of taxation invisible to the customers. As such, the application of
VAT can minimizes the economic cost of tax collections and it facilitates effective administrations of the taxing
system that again boosts the national development of the country where it is appropriately executed.
The study of Purohit (1993) on the adoption of VAT in India considering its problems and prospects
reveals as the implementations of the VAT by a rapidly growing number of countries has been one of the most
remarkable events in the evolution of commodity taxation in this century. The author concludes as VAT
generates sufficient amount of revenues for the government that enables to boost the country’s economic growth
in general. The study of Bogetic& Hassan (1993), on the emerging conventional wisdom based largely on
practice and numerous country case studies, argued as Indonesia introduced VAT in 1983 and by 1988; the ratio
of VAT revenue to GDP had risen to 4.5%.
The scholarly study of Le, (2003) reveals as VAT is a form of indirect tax collected at various stages
of production-distribution chains when value is added up on both goods and services. But the most important
issues that come to be ambiguous about VAT are that how we know as the value is added up on goods and
services. To that extent, most of commentators assumes as value added is simply measured as the difference
between the value of output and the cost of inputs for both goods and services. Hence, if properly designed and
implemented, the VAT that can be effectively collected on the pure value added generated at any stage can be
viewed as equivalent to the single retail sales stage tax but implemented in a different fashion.
While analyzing VAT and Economic Growth in the context of Nigeria, by using time series data from
1994 to 2008 of four macroeconomic variables of GDP, VAT, total tax revenue and total federal government
revenue that create the link between VAT & GDP,Adereti, et al., (2011), shows as increment of the revenue base
for the government to make funds available for developmental purposes in order to accelerate economic growth
is the main aim of adoptions of VAT. This can be reasoned as VAT secretly imposed on the prices of goods and
services articulating the value are added upon them. Through such concept, it will reduces the administrative
costs accounted on them because of the VAT self-enforcement mechanism and due to that it has been embraced
by many countries world-wide.
As stated by many scholars and experts of taxations, countries that do impose a VAT tend to be larger,
wealthier, and more industrialized than those that do not (Emrana & Stiglitzc, 2005). This is reasoned as VAT is
imposed on buyers at each stage of value adding chains, and no one refuses to pay it unless otherwise refuses to
purchase the goods and services. And that is why the Ethiopian government makes tax reform in the year 2002
that paves the way for the emergence of VAT through replacing the outdated sales tax with the VAT
proclamation No 285/2002 and being executed on January 1st 2003.
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Orocka & Mbuagbo, (2012)explores how Cameroonians view the payment of taxes to the
Cameroonianstate in the backdrop of the pervasive corruption and the dismal levels of social service provision
characterising public governance in the country since the early 1990s and they concludes that such perceptions
about taxation illustrate the challenges confronting African states if they seek to expand their capacity for
domestic resource mobilisation through taxation. This imply that corruption in the area of taxation is the main
challenge of African countries and it give an insight for taxing authorities and the government as if taxation is
collected appropriately and implemented as required, it plays as a tool for the facilitations and speed up of the
countries infrastructures.
The study conducted by Charlet&Butdens (2012) on the OECD International VAT/GST guidelines of
the past and future developments reveals as the share of VAT, as a percentage of total taxation has grown by
more than 70%, from 11.2% on average in 1985 to 19.2% in 2009 and even if the ratios vary considerably
between countries, among 27 of the 33 OECD countries with VAT, it accounts for more than 15% of total
taxation during the study periods.
The study of Owolabi& A.T (2011) on the empirical evaluation of the contribution of VAT to
development of Lagos State economy using the micro economic indicators of economic development such as
infrastructural development, environmental management, education sector development, youth and social
development, agricultural sector development, health sector development and transportation sector development
for the period 2001 to 2005showed as VAT revenue contributed positively to the development of the respective
sectors though the positive contribution was statistically significant only in agricultural sector development. On
the aggregate however, VAT revenue had a considerable contribution to development of the economy during the
study period and finally the paper calls for equity in sectoral spending of VAT proceeds to ensure balanced and
sustainable development of the state.
Alemu (2011),empirically analysis the contributions of VAT for economic development and social
spending in Ethiopia from 2003 to 2010 using the variables of Health sector development, education sector
development, agricultural and natural resource development, infrastructural development, other development
indicator sector and development indicator sector. And the analysis of the author showed as VAT revenue had a
considerable contribution for the development of the economy during the period under study though the
contributions are statistically significant only to health and agricultural and natural resource development sectors.
To that extent, the paper calls for equity in sectoral spending of VAT proceeds in Ethiopia.
While evaluating the relationships among taxations and economic growth in Ethiopia from 1993 to
2012; Jalata, (2014) shows as the contributions of tax revenue towards economic growth with the compositions
of GDP shows a trend of significant increasing from period to period and on average growth rate of total tax
revenue becomes 16% and that of GDP during the periods under review were 8.97%. Though the contributions
of both foreign revenue and non-tax revenue to GDP were 5.16% and 4.11% on average respectively, it was
much less than that of total tax revenue which is 8.1% on average. And hence, the author recommended as it is
appropriate to dependsufficiently on tax revenue and to some extent non tax revenue than waiting the support of
foreign revenues. However thecollections and implementations of tax revenue must be supported by strong tax
administrations system.
Jalata, (2014) investigated the relationships between VAT and economic growth in Ethiopia from 2003
to 2012 and that scholarly contributions reveals as there was a positive correlations exist between VAT and
economic growth in Ethiopia and every 1% increase in VAT revenue causes about 13.55% increase in GDP
keeping Total tax revenue with the exceptions of VAT, Non-tax revenue and foreign revenue constant during the
study periods.
Generally, the summary of the above authors on the study area can be concluded as VAT promotes
growth for these countries that incepted such taxing system and its adoption was still on going as every country
needs to benefits and boosts their economic growth though such benefits may be not without some negative
effects. However, specifically in Ethiopian context, the concept of VAT itself is new as the history reveals life
span of VAT implementations only with one decade in our country. To that extent, the contributions of VAT
towards the national development of Ethiopia is still not identifiable reasonably. Hence, the present paper tries to
fill such limited available literature on such criticalthemewith the objectives of identifying the starring role of
VAT as a tool for national development from its adoption in 2003 to 2012 in Ethiopian context.
186
3. RESEARCH METHODOLOGY AND DATA
3.1. Research Methodology
This paper seeks to investigate the relationship between VAT and national development in Ethiopia from its
inceptions of 2003 to 2012. In doing so, theannual quantitative secondary time series data was
employed.Suchquantitative data were sourced mainly from the Ethiopian Revenue and Custom Authority
(ERCA), Ministry of Finance and Economic Development (MOFED), and Ethiopian Economic Associations
(EEA). This research work is both descriptive and inferential in nature that uses the variables of the data of
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Gross domestic product (GDP) and Value Added Tax (VAT) for the period of 2003 to 2012. The study applies
the Ordinary Least Square (OLS) regression and correlation coefficient for the purpose of empirically estimating
therelationships between GDP and VAT. Both SPSS statistical package version 20.0 and Stata/SE version 11.0
was employed for analyzing the data. Hence, while descriptive statistics was employed to describe the data as
they present using percentages and ratios, the independent student t-test was used for validating the research
hypotheses and for interpreting the result obtained from the OLS.
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3.2. Model Specification
This paper examines the correlations among GDP and VAT in order to investigate the contributions of VAT for
Ethiopia’s national development for about a decade starting from its adoptions.To that extent,construction of a
statistical model which inauguratesthe relationships among the variables of the study was very essential. The
review of different empirical literatures existed in the area of VAT and national development for different
countries shows as the analysis of selected variables has the linear functional form in theirgeneral contexts.
Hence, guided by the perceived functional relationship between the matrix of national development (GDP) and
VAT revenue, the link is forged between these two variables. From sub-macro and micro economic perspectives,
the model for this work states that the national development (GDP) depends on the revenue collected from VAT.
Accordingly, the purposeful relationships and resulting models are specified as follows:
GDP = f (VAT) (1)
From the above functional relationships, the working model of the paper is specified below:
GDP = β0 + β1 (VAT) +μ (2)
Where;
GDP= Gross domestic product, VAT = Value Added Tax, β0= Autonomous (Intercept)
β1= Coefficient of VAT, μ = Error term
As the national development is expected even when no Revenue was collected from VAT,the ‘priori’
expectation is that the model parameter is expected to be positively signed.
3.3. Research Hypothesis
The review of different theoretical and empirical previous researches on this subject area shows as there were
positive relationshipsbetween VAT and national developmentfor the economies of different countries. To that
extent, the present study evaluates statistically by developing the following hypothesis:
H0: Value Added Tax plays no significant role for Ethiopia’s national development.
H1: Value Added Tax makes a crucial role for Ethiopia’s national development.
4. RESULTS AND DISCUSSIONS
A. Results of Descriptive Analysis
The common activities of taxing system in any country were to raise revenue in a safe and dependable
fashion.When the country grows richer, the government typically raises enormousextent of tax revenues which
becomes enormous percentages of the country’s GDP. To that extent, the responsibility of any countries
government was to make the required adjustment in order to efficiently and effectively collect the tax revenues
and hence, to escalate its sharefor national development. The same is true in the context of Ethiopian VAT
becauseafter its adoptions, the growth rate of GDP werealarmingly increased and reached about 21.9% on
average during the year 2003 to 2012 with the minimum of 1% in 2003 and the maximum value of 44.37%
in2008 (Table 1, Figure 1). The ratio of VAT revenue to GDP was only 0.46% at the age of its adoptions but
such ratio reaches its highest points of 4.25 % in 2012. Though there were some fluctuations of the ratio of VAT
to GDP during the periods under review, the average ratio of VAT revenue to that of GDP was 2.95% (Table 1,
Figure 2).In addition to that, the growth rates of VAT from 2003 to 2012 was 66.27% on average and while the
maximum of such growth rates was 230.31% during the year 2005, its minimum growth rates becomes 1% in the
year of 2003(Table 1, Figure 3).Therefore, starting from its adoptions to the periods under considerations, VAT
contributed its own share to enhance the national development of Ethiopia.
B. Result of Regression Analysis
This part provides the empirical result of the inferential data and in order to investigate the relationships between
VAT and national development in Ethiopia from 2003 to 2012, the statistical examinations of the quantitative
time series data was analyzed with the applications of OLS methods.
Variable Coefficient Std. Error t-Statistic Sig.
Constant (C) 58202.789 23945.881 2.431 .041
VAT 23.500 2.184 10.760 .000
R: 0.967R-squared: 0.935
Adjusted R-squared: 0. 927F-statistic: 115.771
Source: SPSS version 20.0 Regression Output
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From the model outlined in the research methodology and the above regression out put, the following estimated
model is sketched as below:
GDP = 58202.789 + 23.500 VAT +μ
The regression findings of the study showed as the autonomous or Intercept of the regression result
was positive which depicts that the economy will be having a positive value of 58202.789 as the national
development, due to the existence of VAT during the periods under review of 2003 to 2012. The positive
coefficient of VAT confirms the priori expectation of a positive relationship between VAT revenue and national
development. To that extent, the result reveals as 1Birr increment of VAT will lead to an increment of about Birr
23.500 Million in Ethiopia’s national development.Moreover, the coefficients of determination (the R-square
statistics) of the model was 0.935 implying about 93.5 percent of variations in national development is explained
by VAT while only about 6.5 percent of the variations in national development were accounted by other
variables.This reveals as the model is good fit and theexplanatory power of the variable within the model is
highto make strong conclusions.The regression output of the model also informs as the correlation coefficient (R)
which shows the correlation environment among VAT and national development during the study period in
Ethiopia is on average 0.967. This reveals as there isthe existence of both positive and strong relationships
among them. In addition to that, the regression findings also acquaints as F-ratio is 115.771 which is significant
because probability value of 0.000 is less than 0.05. This again shows as VAT has statistical connection with
national development and it makes a unique significant contributionfor it during the period under review.
Moreover, the result of t- calculated (t-statistics value)of 10.760aremore than that of the t-tabulated of
1.812 by testing it at 5% level of significant.This implies as VAT has statistically significant influence on
national development of Ethiopia during the periods under considerations. To that extent, the researcher
therefore rejected the null hypothesis and accepted the alternative hypothesis assuming that VAT revenue makes
significant contributions to the country’s national development for the study period. Hence, Ethiopia must search
for the way to boost the revenue from VAT by mostly supporting with the configurations of networks among all
theagents of government and taxing authorities of the federal level, each regions and city administrations in order
to meet the growth and transformations plans (GTP) of the country.
5. CONCLUSION AND POLICY IMPLICATIONS
Recently an increasing number of countries around the world have swapped their concern towards the adoptions
and implementations of VAT and Ethiopia is not exceptions but one among such a large chorus. This study
investigates the relationships between VAT and national development in Ethiopia from 2003 to 2012 with the
applications of the OLS method by using the annual quantitative time series secondary data.The result of the
study showsthat, after the implementations of VAT in Ethiopia, the national development that measured in terms
of GDPhas largely improved. This is evidenced because ofthe growth rates of VAT itself was 66.27% on average
and the average ratio of VAT revenue to that of GDP was 2.95%. And finally, the growth rate of GDP after the
implementations of VAT becomes 21.9% on average during the periods under review. Furthermore, the
regression findings of the study showed as the Ethiopian National development is significantly influenced by the
VAT revenue. So, the study concluded that VATplays an energetic role for the national development of Ethiopia
and it enables to succeed the current growth and transformations plan (GTP) of the country.Therefore the paper
recommends that the Ethiopian government should make a full-fledged effort to efficiently collect and
effectively utilize such tax revenue through closing the door towards the issues of corruptions which can be
possible through making the VAT administrations more fashionable than ever before.
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Charlet, A., & Butdens, S. (2012). The OECD International VAT/GST Guidelines: past and future developments.
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Emrana, M. S., & Stiglitzc, J. E. (2005). On selective indirect tax reform in developing countries. Journal of
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Ethiopia Sales and Excise Tax Proclamation No. 68/1993, Foreign Tax Law, Inc. Ormond Beach, Florida, USA.
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Federal Democratic Republic of Ethiopia, Council of Ministers Regulations issued pursuant to VAT
proclamation No. 79/2002, Federal Negarit Gazeta, Addis Ababa, Ethiopia.
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APPENDIX
Table 1: VAT Revenue and GDP
Year
In Millions of ETB
VAT/ GDP
Ratios (%)
Growth rates of
GDP (%)
Growth
rates of VAT
GDP VAT (%)
2003 81421.07 372.2 0.46 1 1.00
2004 91044.09 1220.7 1.34 11.82 227.97
2005 100908.38 4032.05 4.0 10.83 230.31
2006 131641.45 4809.15 3.65 30.46 19.27
2007 171989.14 5931.48 3.45 30.65 23.34
2008 248302.68 7312.89 2.95 44.37 23.29
2009 335392.04 8988.18 2.68 35.07 22.91
2010 382938.65 13677.93 3.57 14.18 52.18
2011 506079.135 16156.12 3.19 32.16 18.12
2012 548921.587 23313.25 4.25 8.47 44.30
Average 259863.8 8581.395 2.95 21.9 66.27
Source: Author’s computations based on the data from MOFED, ERCA & EEA
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