Research Proposals



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Title Page






Table of Content


1.1 Background to the Study

1.2 Statement of the Problem

1.3 Objective of the Study

1.4 Research Questions


1.5       Research Hypotheses

1.6       Scope of the Study

1.7       Significance of the Study

1.8       Limitation of the Study

1.9       Definition of Terms




3.1       Research Design

3.2       Population of the study

3.3       Sample and Sampling Technique

3.4       Method of data collection

3.5       Sources of Data


3.6       Data Analysis Techniques

3.7       Model Specification


4.1       Descriptive Analyses of Variables

4.2       Test of Hypotheses     



5.1       Summary of Findings

5.2       Conclusion

5.3       Recommendations






1.1       Background to the Study

One of the recurrent problems of the three-tier structure of the government in Nigeria is dwindling revenue generation as characterized by yearly budget deficits and insufficient funds for economic growth and development. This economic reasoning emphasizes the revenue need of government and indicates that, apart from strengthening the existing sources of revenue, it is also necessary for government to diversify its revenue base in order to meet its constitutional responsibilities.

However, Myles (2020) stated that financial capacity of any government depends among other things, on its revenue base, the fiscal resources available to it and the way these resources are generated and utilized. It is therefore, the duty of the government to adequately mobilize potential revenue across the country to prevent economic stagnation.



This mobilization involves the adoption of economically and politically acceptable taxes that would ensure easy administration, accounting, verification, auditing and investigation based on the equality, neutrality and other attributes of a good tax. Consumption taxes have a wider coverage since the cause of adverse variance can be adequately controlled under proper administration (Leach, 2023).

The revenue generated from consumption taxes can help to boost the financial base of any economy. This however involves exploiting the potential and adopting the type of consumption tax that will recognize the tax payers as utility minimizing individuals and safeguarding their evading behaviour.


However, the essential consideration in choosing a consumption tax option from other tax options includes; assessment of administrative feasibility of each tax and determining its relative revenue potentials, its degree of voluntary compliance, its relative neutrality, its equity essential for regressiveness and the efficiency of these criteria, one can easily see the under lying reasons why government replaced a Retail Sales Tax (RST) with Value Added Tax (VAT) as consumption tax.

The goods and services exempted by the act are purely those that bother on peoples welfare and whose requirements are necessary for improving human development. These include medical and pharmaceutical products, basic food items, educational materials, agricultural services and equipment, etc. However, there is much confusion over which goods or services should be in the exemption list. The impact of value added tax on revenue generation of government in Nigeria.

Furthermore, Nigeria adopts the same 7.5% VAT charges on all goods and services, either domestic or imported. It was increased to 10% on May 23, 2007. But, Nigerians rejected the hike in the VAT rate and the Nigerian Labour Congress went on a five day strike which eventually jeopardized the economy. And this made the Federal government to reverse to the old VAT rate.


Nigeria also imposes a zero rate on export commodities with a view to encouraging favourable balance of trade. It would seem, however, that the benefits of VAT outweigh its demerits. What is only required is a measure of commitment and transparency in the mobilization and allocation of VAT proceeds.

Without reservation, tax revenue all over the world plays a vital role in the development of an economy; this facilitated many nations to introduce value added tax on goods and services. Tax imposition and its collection, mostly depends upon a country’s economic structure, its developmental phase, growth of its service sector, extent to which the country has been industrialized, and its employment level (Qamruz, Okasha, & Muhammad, 2012).

Value added tax is a consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service. Value added tax has become a veritable source of revenue in many developing countries in Sub-Saharan Africa; it has been introduced in several countries.


Nigeria can be traced to the report of the committee set up by the Federal government in 1991 to review the entire tax system with a view to expanding the financial base for revenue generation so as to enhance the economic growth of Nigeria. The introduction of VAT in Nigeria through decree 102 of 1993 marks the phasing out for the sales tax Decree No. 7 of 1986. The impact of value added tax on revenue generation of government in Nigeria.


The Decree took effect from 1st December 1993, but by administrative arrangement, invoicing for the purpose did not commence until 1st January 1994 (Gendron, 2005). The producer or the service provider remits to the government the difference between the VAT output and VAT input and retains the rest to offset the taxes they have previously paid on the inputs. Undeniably, VAT has become a major source of revenue in Nigeria; its adoption with the enactment of Value Added Tax Decree in December, 1993 with an effective date of 1st January 1994 was an important landmark in tax reforms in Nigeria (Ajakaiye, 2000).

Therefore, Value added tax is a consumption tax, levied at each stage of the consumption chain and borne by the final consumer of the product or service. Value added tax has become a veritable source of revenue in many developing countries in Sub-Saharan Africa, It is felt that the narrow base of the consumption negates the fundamental principles of consumption tax; which by nature is expected to cut across consumption of goods and services, it is on this basis that this study focuses on the impact of value added tax on revenue generation of government in Nigeria.


1.2       Statement of the Problem

In Nigeria, value added tax is one of the instruments the Federal government introduced to generate additional revenue. However, most prominent Nigerians and interest groups had spoken against its introduction. Moreover, it would appear that VAT is froth with some problems. However, after its adoption into the Nigeria tax system, it has become a controversial issue that generates debate among several authors like Naiyeju and (2019) that the purpose of introducing value added tax as one of the methods of taxation in Nigeria economy has not yet known.

In addition, poor VAT administration as identified by Olaoye (2009) was one of the problems confronting VAT in Nigeria. Specifically, tax authorities perform only the technical functions without performing the needed management functions, taken the complexity of tax administration into consideration, there are bound to be ineffectiveness of tax administration.


Basically, the performance of only technical functions leads to false declaration, refusal to complete tax return forms, fraud, inflation of deductible expenses, smuggling, default, illegal bunkering, etc. The dishonest practices by some tax officials also pose a serious threat to the effective tax administration in Nigeria especially when such practices are capable of having demoralizing effects on honest tax payers

Furthermore, Taiwo (2008), observed that the distribution of government revenue is skewed in favor of one tax base or the other (Journal of Accounting (2016), in Nigeria.


Nevertheless, the overwhelming evidence of positive impact of oil revenue on economic growth in Nigeria cannot be overemphasized (Odusola, 2006). However, the question is, are other forms of taxes not important for considerations? Emanating from the above therefore, there are some questions to ask?

1)         What relationship exists between Nigerian’s tax revenue from personal income by tax payers and economic development of the nation?

(2)        What is the contribution of other tax bases such as value added tax to the overall tax revenue of Nigeria?


1.3       Objective of the Study

(i)         To determine the impact of value added tax (VAT) to Real Gross Domestic Product growth rate of Nigeria.

(ii)        To ascertain the impact of value added tax (VAT) to total tax revenue generations of Nigeria.


1.4       Research Questions

(i)         How does value added tax affect Real Gross Domestic Product growth rate of Nigeria?

(ii)      How does the impact of value added tax affect the total tax revenue generations of Nigeria?


1.5       Research Hypotheses

Ho1:     Value added tax has no significant effect on Real Gross Domestic Product growth rate of Nigeria.

H1:       Value added tax has significant effect on Real Gross domestic product growth rate of Nigeria.

Ho2        Value added tax has no impact on the total tax revenue generation of Nigeria

H2        Value added tax has an impact on the total tax revenue generation of Nigeria.


1.6       Significance of the Study

Tax authority: This study will be relevant to tax authority because it will help them have an in depth understanding of Vat able person and therefore enable to adjust or further their policies as regards their VAT rate.


Government: This study will enable the government to ascertain the income that flows in from Value Added Tax and of course help them to determine their policies. The impact of value added tax on revenue generation of government.

General Public: In addition, this study will help the general public to understand the importance of value added tax and future encourage or promote compliance among the general public

Future researchers: Future researcher would benefit from this study because they can make reference to this work while undertaking their researcher work.


1.7       Limitation of the Study

There are so many limiting factors which the researcher encountered in the process of researching which may include these:

(i)         Inadequate information, the researcher was not able to get an adequate information due to the inaccessible nature of the information required by him.

(ii)        Another problem encountered was illiteracy of people who some questionnaire was distributed to and also to collection of the questionnaire from such people.

(iii)  No sufficient finance for transportation to the venue to collect data.

(iv)       The time spent in meeting the resourceful person is long and there was no time for the long waiting


Definition of Terms

Nigeria Tax Authorities: This refers to the revenue collection agencies of the Federal Government of Nigeria represented by the Federal Inland Revenue Service (FIRS), State Internal Revenue Service (SIRS) and Local Government Revenue Committee.

Joint Tax Board (JTB): This is the supervisory and regulatory body that defines the scope of operation and administrative system between the various tiers of tax authorities.

Revenue: Implies resources or pool of funds available to the Federal Government of Nigeria from internal and external sources.

Tax: Obligatory transfer of financial resources from the private organisation to the public sector for common pool

Government Revenue: This is defined as Money received by a government, it is an important tool of fiscal policies of the government and it is the opposite of government spending.



Value added tax will be able to strengthen the economic stance of Nigeria if the government can put more of its revenue strategies and focus on how best to sensitize and encourage citizens to become tax compliant and faithful in remittance of value added tax as government funds at the due time.

We will also conclude from the findings made so far, that value added tax appears to be the most useful and major contributor to total tax revenue of the nation as it yielded a significant influence on both tax revenues and gross domestic product of the country.


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Joselyn Nya

My Name is Joselyn Nya A Publisher in Project Boss Team. I'm a Nigerian I'm a graduate/Educational Researcher. Project Boss Team. We are the best for Project materials and project writing services. Email:

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