Abstract:
This research investigated VAT as a suitable alternative to sales
tax in a developing economy using Nigeria as a case study.
The investigation was necessitated by the overriding influences tax
has over the economic and socio-political welfare of the people. In view
of. this, the introduction of a new tax system - VAT, and the scrapping
of an existing one - sales tax, deserves a critical analysis and revaluation
with the view to estimating possible problems .
Data for the study were collected from questionnaires and oral
interviews conducted from responsible Nigerians from all walks of life.
Five hypotheses were set to guide and direct the study. The data
was analysed using percentages, and chi-square (X 2 ) statistical test.
From the study, it was discovered among other things, that VAT
is not a suitable option to sales tax in a developing economy because
almost all the inherent problems of developing economy constitute serious
impediment to efficient implementation of VAT in a developing economy.
That VAT cannot generate mare revenue than sales tax due to high
running costs, poor record keeping by the people etc. That given the
cost benefit analysis the ease and efficiency of administering sales tax
is more than VAT because of lack of qualified manpower, high level of
illiteracy etc.
That sales tax favours developing economies while VAT favour's .
developed economies.
