EFFECT OF INCREASED VALUE ADDED TAX ON ECONOMIC DEVELOPMENT OF DEPOSIT MONEY BANKS IN NIGERIA

The study investigated the effect of increased value added tax on economic development in Nigeria from 2020 to 2024. The data used was sourced from Central Bank of Nigeria. Ex-post facto research design was adopted in the investigation. Multiple regression analysis was employed, in which Auto-Regressive Distributed Lag (ARDL) model as the method of analysis was utilized in the research. The ARDL model evaluates long run and short-run interactions among the specified variables. The unit root tests conducted using Augmented Dickey-Fuller (ADF) revealed that the time series variables used were stationary at level and the first difference, but none of the variables was stationary at the second difference. The ARDL Bound test analysis revealed the existence of long-run equilibrium relationship between increased value added tax and economic development in Nigeria within the period of the study. The coefficient of error correction mechanism was statistically significant and also negatively signed. The results equally found that increased value added tax is statistically significant and positively impacted on economic development in Nigeria in the short-run. However, in the long-run, increased value added tax, though positively related to economic development, but it is statistically insignificant. Again, both inflation rate and interest rate were negatively related to economic development and statistically insignificant in Nigeria in the long-run. However, inflation rate impacted positively and significantly in the short-run in Nigeria. KEYWORDS: Value Added Tax, Economic Growth, Deposit Money Banks, Nigeria