Journal of Research Administration

Abstract

This study examined the effect of indirect taxation on Nigeria’s economic development, specifically examining how value added tax (VAT) and customs and excise duties have affected real gross domestic product (RGDP), unemployment rate (UR), and human development index (HDI) in Nigeria. Using an ex-post facto research design, the study analyzed thirty years of secondary data (1994–2024) using the Autoregressive Distributed Lag (ARDL). The study found out that: there is a positive and significant effect of indirect tax (VAT, Custom and Excise duties) on real GDP in Nigeria, there is a positive (LVAT) / negative (LCED) and significant effect of indirect tax on unemployment rate in Nigeria; as well as a positive and significant effect of indirect tax (VAT, Custom and Excise duties) on human development index in Nigeria. The study concluded that indirect tax has significant effect on economic development in Nigeria as such effect extended across all the economic development indicators studied. Based on the results, the study recommended that government should strengthen the contribution of VAT and custom and excise duties to GDP growth through improvement of compliance, broadening of the tax base, reducing leakages, and enhancing the digitalize tax collection. Moreover, the study recommended that Nigerian government should introduce a policy that can enhance channeling of more VAT revenue towards employment generation. For more improved Nigeria’s human development, government are recommended to maintain effective management and utilization of revenue from indirect taxes in enhancing Nigeria’s healthcare facilities, education and quality standard of living in the country.