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ABSTRACT
Value added tax (VAT) is a utilization tax imposed at each phase of the utilization chain and borne by the last purchaser of the item or service. It is an indirect tax exacted on goods and/or services as a percentage of their value added. The consumer pays VAT on purchases in addiction to the normal prices; the seller than pays the government the value of the VAT collected on sales less VAT they have paid on purchase inputs.
The study seeks to examine the impact of foreign inflows on economic growth in Nigeria. The study tests for unit root using Augmented Dickey-Fuller (ADF) to check if the variables are stationary or non-stationary. Also to check that long run relationship exists, the study used the Johansen Co-integration test. This show the existence of long-run relationship among the variables employed in the study. The findings, therefore, concludes from the data used and the various statistical and econometric measures that value added tax can increase federal government revenue in Nigeria. The funds inflow from value added tax can raise the national income level of the poor countries like Nigeria and help to reduce the poverty in the country. Thus, value added tax are beneficial in raising more funds for the government and by and large economic growth. Furthermore, an uncontrolled increase in value added tax can have a deleterious effect on domestic on the Nigerian populace. Seeing from the findings of the study that VAT significantly and positively influences federal government revenue in Nigeria, government should ensure that the rate of VAT does not become inconvenient for the populace so as to avoid the negative effects of imposing excessively high tax on the people most especially the low class group of the Nigerian population.
