TABLE OF CONTENTS
1.0 Background of the Study
1.1 Objective of the Study
1.2 Significance of the Study
2.1 Literature Review
2.2 Definition of Value Added Tax (VAT)
2.3 History of Value Added Tax (VAT) Between
1960 to Date
of Value Added Tax Administration in Nigeria on General Price Level in Nigerian
of Value Added Tax on Price Level in Nigeria
of Value Added Tax to Nigeria
of Value Added Tax to Nigeria
OF THE STUDY
The Value Added Tax (VAT) has been developed and adopted
by many countries in the last forty years. VAT was not more than a theoretical
preposition among fiscal scholars. Today, in its comprehensive form, VAT is an
important part of the fiscal system in many countries.
The first country to import VAT in its comprehensive form
was France in 1954. It was imported later to the French speaking countries were
operating one form of VAT or the others. The first developing country to impose
tax in its comprehensive form was the Brazilian State Government in 1957, when
they abolish many various sales taxes and replace them with a single value
added tax as a means of ensuring co-ordination in all the twenty six state in
The International Monetary Fund and the World Bank, two
agencies of the United Nations organisation which are closely identified with
the establishment and continued operation and monitoring of SAP have advised
that the tax system in Nigeria needed less dependent on revenue derived from
As one of the means of raising additional non oil revenue
locally, the introduction of VAT was suggested to the Federal Government to
replace the existing sales tax in furtherance of the tax returns, the federal
government set up two study groups in 1991. One was set up the new federal
ministry of finance and economic development to study and make recommendation
on the reforms needed in the direct taxes in Nigeria.
The other study group of indirection taxation (which is
none relevant here) was set up by the federal ministry of budget and planning
and inaugurated on 20th April, 1991 by the honouarable minister of budget and
planning with the objectives of:
towards consumptions (indirect)
Provide incentive for
Reduce dependence on
(petroleum) oil revenue
Maintain a fairly
even tax incidence across various levies, stages and elements of production.
It was this committee that gave general guidelines for
the establishment of VAT in Nigeria. It started with the acceptance of the recommendation
on the study group in Nigeria tax system and administration in November 1991.
Consequently, the decision was made public in the 1992 budget. This resulted in
the setting up of modified value added tax (VAT) committee on 1st June 1992,
recommended by the study group.
The major objective of 1994 fiscal policy is to reduce
deficit expenditure to a sustainable level. taxation as the oldest tool of economic
management has deepen root in Nigerian economy. The federal government
therefore decided to abolish the sales tax and at the same time consider its
prospect and impact or effect on general price level index.
1.1 OBJECTIVE OF THE STUDY
The primary objective of this research is to identify
crees of value added tax, which requires strengthening in order to cope with
the complex and dynamic nature of the value added tax on general price index level.
specifically the objective of this research study are to:
To determine the
impact and effect of value added tax on general price level.
Determine the primary
aim of raising revenue to finance government expenditure
To identify the
factor influencing the economic activities
allocation of resources in a socially desirable manner.
To achieve equitable
distribution of income and wealth.
To combat depression,
inflation and deflation.
To ensure that
economic growth is achieved.
1.2 SIGNIFICANCE OF THE STUDY
This project is aimed at bringing to light the prospect
and impact of value added tax and its effect on the general price level. It is
my hope that this project will show the effect of VAT on consumers demand in
Nigeria and how it either increase or decrease price of goods or items price
generally. Moreover, it is also hoped that this research will bring forth the
advantages and disadvantages of VAT on the Nigerian economy.