Description
Effect of value added tax on internally generated revenue in Lagos state, Nigeria.
Abstract
The study examined the impact of value added tax on the internally generated revenue of Lagos State for a 10-year period ranging between 2012 and 2021. The study established that VAT is a consumption tax on economic operations including imports. VAT, being an indirect tax, attracts a flat rate of 5% and is collected on behalf of the government by businesses and organizations who have registered with the Federal Inland Revenue Services (FIRS) for VAT services. The study adopts secondary data, precisely panel data. The analysis of data was carried out by the descriptive and inferential statistics are employed to analyze the data. In furtherance, the multiple linear regression analysis is adopted to estimate the coefficient of parameter estimates in the models specified. Data on the variables were obtained from the Lagos State Bureau of Statistics and Lagos State Board of Revenue. IGR was contextualized as the summation of Ministries, Department and Agencies (MDAs) Revenue, Pay-as-you-earn (PAYE), road taxes, direct assessment and other taxes. A model was specified in which IGR is expressed as a function of VAT. The model was estimated by the use of simple linear regression analysis. The results revealed that VAT has a significant positive impact on IGR in Lagos State. A billion naira increase in VAT is expected to increase Lagos State’s IGR approximately by N7.39 billion. Furthermore, it was found that about 92.6% variation in IGR is explained by VAT. The study concludes that value added tax contributed enormously to internally generated revenue of Lagos State government between 2012 and 2021. To this end, the study suggested amongst others that the Lagos State government should enact fiscal laws and legislations and strengthen existing ones in line with macroeconomic objectives of economic growth, full employment, financial independence and price stability…
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