VALUE ADDED TAX AND SOCIAL WELFARE IN NIGERIA

Abstract: Fiscal tool such as value added tax is employed to enable government finance its public activities with a view to minimizing the distortions created by market forces. There is no doubt that value added tax, indeed increases government revenue, but how has the revenue generated from value added tax impacted on economic development of Nigeria is an issue of concern among other factors. This outcome focused on the effect of Value Added tax on social welfare in Nigeria. The outcome utilized vector Error correction model based on pooled data frame work for the period 1993 – 2023. The use of VECM was to determine the short-run dynamics and long-run equilibrium adjustment among the various variables while Philip-Peron Test was conducted to ascertain the stationarity of the variable in the time series. The outcome of the outcome indicate that value added tax had insignificant contribution to social welfare in Nigeria. The outcome conclude that higher value added tax efficiency may coincide with lower levels of economic distress and when well-managed can contribute to reducing unemployment rate over time. Based on the outcome of the outcome, recommendations and conclusion were made.