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Article Title:
A LOG LINEAR ASSESSMENT OF THE EFFECT OF VALUE ADDED TAX (VAT) ON REVENUE GENERATION IN NIGERIA
by Okwori Joseph and Ochinyabo Samuel

Abstract:
This paper is an assessment of the effect of Value Added Tax on Revenue Generation for sustainable development in Nigeria. The study is aimed at establishing an innovative method of assessing taxation on the Revenue Productivity theory-that is, high revenue generation at minimal cost given a very broad all inclusive base. Using a log-linear data for regression on e-views 7.0 technique, the study found a positive 0.186 tax elasticity and buoyancy which is desirable. This shows that VAT is not only a viable taxation tool in Nigeria but also has great potential to generate adequate revenue for the Nigeria Government. But, government as an element of the package included numerous exemptions, generous concessions, and arbitrary waivers especially for unproductive ventures. This has greatly affected revenue base, leaving high annual budget deficits, and an extremely poor fiscal performance. This also has implications for proper VAT threshold which raises concerns of abuse and high cost, sharply leading to revenue losses and poor response of VAT to GDP growth. The paper therefore recommends that there is a need to consider the technology of the tax collection. That is; the feasibility of the tax instruments, cost of administration, and compliance. Also, special attention in the area of automation, consumer information and its mechanism modified to respond to GDP flexibilities is required.

Keywords: log linear assessment, Value added tax, revenue generation, sustainable development

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