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DETERMINANTS OF VALUE ADDED TAX, INTEREST RATE, INFLATION AND INFLUENCE ON REVENUE GENERATION IN NIGERIA
A b s trac t
The study examined the determinants of VAT, Interest rate, Inflation and Influence on revenue generation in Nigeria. Secondary data were gathered from CBN statistics bulletins that cut across 1990 and 2012. This period was selected in order to capture the inflation, Interest rate, prior, during and post implementation of VAT. Data were analyzed with the use of descriptive analysis and Johansen co-integration test. The result revealed that VAT, INT and INF have the means of 461214, 19.06478 and 20.09913 respectively, while their standard deviations stand at 1460060, 3.284060 and 18.93905. Their minimum and maximum values are 0.0000 and 7101500 for VAT, 13.54 and 29.80 for INT, 8641 and 4749200, 5.4 and 72.80 for INF. The descriptive statistics gave a clear picture of the distribution and range of all the series, there exist no significant relationship between VAT and INT (r=-0.200, p>0.05), INF and VAT (r=0.139, p>0.05), INT and INF (r=-0.074, p>0.05). However, there is significant positive relationship between VAT& INF both on the short and long run, while interest rate exert negative influence on Inflation both on the short and long run. There is strong and positive relationship between VAT and revenue generation in Nigeria. It is recommended that government should provide effective anti-inflationary policy to cushion the inflationary tendencies of value added tax in the country and regulate the rise in the level of interest rate in order not provoke price instability and at the same time maintain the current level of improvement in the revenue generation in the country.
Keyword: Value Added Tax, Interest Rate, Inflation, Co-Integration Test, Revenue G eneration
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