Value Added Tax and price stability in Nigeria: A partial equilibrium analysis
The economic impact of Value Added Tax (VAT) that was implemented in Nigeria in 1994 has generated much debate in recent times, especially with respect to its effect on the level of aggregate prices. This study empirically examines the influence of VAT on price stability in Nigeria using partial equ...
| Main Authors: | , |
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| Format: | Article |
| Language: | English |
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University of A Coruna
2013-12-01
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| Series: | European Journal of Government and Economics |
| Subjects: | |
| Online Access: | http://revistas.udc.es/index.php/ejge/article/view/4292 |
| _version_ | 1818285973188902912 |
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| author | Marius Ikpe Alwell Nteegah |
| author_facet | Marius Ikpe Alwell Nteegah |
| author_sort | Marius Ikpe |
| collection | DOAJ |
| description | The economic impact of Value Added Tax (VAT) that was implemented in Nigeria in 1994 has generated much debate in recent times, especially with respect to its effect on the level of aggregate prices. This study empirically examines the influence of VAT on price stability in Nigeria using partial equilibrium analysis. We introduced the VAT variable in the framework of a combination of structuralist, monetarist and fiscalist approaches to inflation modelling. The analysis was carried out by applying multiple regression analysis in static form to data for the 1994-2010 period. The results reveal that VAT exerts a strong upward pressure on price levels, most likely due to the burden of VAT on intermediate outputs. The study rules out the option of VAT exemptions for intermediate outputs as a solution, due to the difficulty in distinguishing between intermediate and final outputs. Instead, it recommends a detailed post-VAT cost-benefit analysis to assess the social desirability of VAT policy in Nigeria. |
| first_indexed | 2024-12-13T01:17:12Z |
| format | Article |
| id | doaj.art-a071981faef145eb84e16bc779a34710 |
| institution | Directory Open Access Journal |
| issn | 2254-7088 |
| language | English |
| last_indexed | 2024-12-13T01:17:12Z |
| publishDate | 2013-12-01 |
| publisher | University of A Coruna |
| record_format | Article |
| series | European Journal of Government and Economics |
| spelling | doaj.art-a071981faef145eb84e16bc779a347102022-12-22T00:04:19ZengUniversity of A CorunaEuropean Journal of Government and Economics2254-70882013-12-012210.17979/ejge.2013.2.2.4292Value Added Tax and price stability in Nigeria: A partial equilibrium analysisMarius Ikpe0Alwell Nteegah1Federal University, Ndufu-Alike, IkwoUniversity of Port-HarcourtThe economic impact of Value Added Tax (VAT) that was implemented in Nigeria in 1994 has generated much debate in recent times, especially with respect to its effect on the level of aggregate prices. This study empirically examines the influence of VAT on price stability in Nigeria using partial equilibrium analysis. We introduced the VAT variable in the framework of a combination of structuralist, monetarist and fiscalist approaches to inflation modelling. The analysis was carried out by applying multiple regression analysis in static form to data for the 1994-2010 period. The results reveal that VAT exerts a strong upward pressure on price levels, most likely due to the burden of VAT on intermediate outputs. The study rules out the option of VAT exemptions for intermediate outputs as a solution, due to the difficulty in distinguishing between intermediate and final outputs. Instead, it recommends a detailed post-VAT cost-benefit analysis to assess the social desirability of VAT policy in Nigeria.http://revistas.udc.es/index.php/ejge/article/view/4292Value added taxprice stabilitypartial equilibrium analysisstatic modelNigeria |
| spellingShingle | Marius Ikpe Alwell Nteegah Value Added Tax and price stability in Nigeria: A partial equilibrium analysis European Journal of Government and Economics Value added tax price stability partial equilibrium analysis static model Nigeria |
| title | Value Added Tax and price stability in Nigeria: A partial equilibrium analysis |
| title_full | Value Added Tax and price stability in Nigeria: A partial equilibrium analysis |
| title_fullStr | Value Added Tax and price stability in Nigeria: A partial equilibrium analysis |
| title_full_unstemmed | Value Added Tax and price stability in Nigeria: A partial equilibrium analysis |
| title_short | Value Added Tax and price stability in Nigeria: A partial equilibrium analysis |
| title_sort | value added tax and price stability in nigeria a partial equilibrium analysis |
| topic | Value added tax price stability partial equilibrium analysis static model Nigeria |
| url | http://revistas.udc.es/index.php/ejge/article/view/4292 |
| work_keys_str_mv | AT mariusikpe valueaddedtaxandpricestabilityinnigeriaapartialequilibriumanalysis AT alwellnteegah valueaddedtaxandpricestabilityinnigeriaapartialequilibriumanalysis |