Indirect Tax on Income Distribution in Nigeria

Abstract

The study examined the effect of indirect tax revenue on income distribution in Nigeria spanning from 2000-2024 using value added tax as the independent variables and income distribution as the dependent variable. Ex Post Facto research design was employed for the study. Data for the study were generated from the Central Bank Statistical Bulletin and Federal Inland Revenue Service (FIRS) in Nigeria. Descriptive statistics was employed to summarily describe the mean, median, standard deviation, kurtosis and skewness of the study variables. Regression analysis was used to test the hypothesis aid of E-Views 9. Based on the analysis, the study revealed that value added tax is positively related to income redistribution and also statistically significant at 5%. It was indicated that stamp duty tax is positively related to income redistribution and also statistically significant at 5%. Based on the findings, the study recommended that there is need to ensure that VAT on goods and services highly consumed by low-income households items, should be either zero rated or exempt while VAT should be imposed on goods heavily consumed by high-income households.