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Abstract
This quantitative research study explores the relationship between Value Added Tax (VAT) and economic development in Nigeria, Ghana, Senegal, and Liberia, with a particular emphasis on the impact of VAT revenue on economic performance indicators. Utilizing a robust research design, the study analyzes secondary data spanning from 2000 to 2022 to examine the effects of VAT on economic growth, using the Human
Development Index (HDI) as a proxy for overall economic development, with the regression diagnostic including test for serial correlation, heteroskedasicity and modern specifications (Ramsey Reset) confirm the robustness of the model.The Ordinary Least Squares (OLS) regression results reveal that VAT exerts a positive and statistically significant impact on economic development in all four countries, although the
magnitude of this effect varies, with Nigeria displaying a notably stronger association. The study's findings underscore the critical role of VAT as a sustainable revenue- generating mechanism, capable of funding infrastructure, public services, and social welfare initiatives. The research highlights the importance of effective tax administration, improved compliance measures, and digital monitoring systems in leveraging VAT's potential to drive economic advancement. Furthermore, the study emphasizes the need for ongoing research to incorporate additional covariates and explore non-linear relationships to better understand the broader fiscal dynamics at play. The study's insights offer valuable recommendations for policymakers in these nations, emphasizing the need for enhanced tax policies and administrative frameworks to promote sustainable economic development.
Development Index (HDI) as a proxy for overall economic development, with the regression diagnostic including test for serial correlation, heteroskedasicity and modern specifications (Ramsey Reset) confirm the robustness of the model.The Ordinary Least Squares (OLS) regression results reveal that VAT exerts a positive and statistically significant impact on economic development in all four countries, although the
magnitude of this effect varies, with Nigeria displaying a notably stronger association. The study's findings underscore the critical role of VAT as a sustainable revenue- generating mechanism, capable of funding infrastructure, public services, and social welfare initiatives. The research highlights the importance of effective tax administration, improved compliance measures, and digital monitoring systems in leveraging VAT's potential to drive economic advancement. Furthermore, the study emphasizes the need for ongoing research to incorporate additional covariates and explore non-linear relationships to better understand the broader fiscal dynamics at play. The study's insights offer valuable recommendations for policymakers in these nations, emphasizing the need for enhanced tax policies and administrative frameworks to promote sustainable economic development.
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