VALUE ADDED TAX AND CONSUMER BEHAVIOUR IN NIGERIA

ABSTRACT

This study examined the concepts of value added tax (VAT) and consumer behaviour in Nigeria, with a view to determining whether the recent increase in the tax rate has any significant influence on consumer behaviour. Specifically, the study was conducted by examining the variables concerned using the information provided by the National Bureau of Statistics annual reports, CBN statistical bullets, and World Bank data, as it focused on a time series data covering a period of 5years. The study deployed the ordinary least squares (OLS) technique on 2 models as it analysed the relationship and impact of the independent variable (Value added Tax) on 2 dependent variables (Consumer goods and Capital goods), after the unit root test had been ascertained by the augmented Dickey Fuller unit root tests through descriptive statistics. In all, the results showed that Value added tax has a negative and significant effect on consumer behaviour in Nigeria at 5% level of significance. Based on the findings of this study, it was recommended that VAT rates should be effectively regulated and monitored to reduce the adverse effect it has on consumer spending.