Abstract
This article aims to evaluate the extent at which VAT is used as an instrument by countries to meet their fiscal deficit and meet the needs of their citizenry. Taxpayers pay taxes based on their ability to pay and with an anticipation that they will receive services in return to their contribution from government. The VAT due to its buoyancy nature contributes sizable amount of taxes which alleviate the financial burden of countries in meeting the financial obligations. Numerous kinds of literature demonstrate that whenever countries experience any budget shortfall they always look for fiscal remedies in either introduction of VAT or changing the rate of VAT. South Africa recently changed its long term rate of 14 % VAT to 15%. This article is conceptual in approach and uses the literature to argue that Value Added Tax (VAT) can be used as an effective instrument to meet fiscal objectives in some African Countries. Countries have the responsibility to ensure that their subject contributes to taxes which amongst others should in the form of VAT. As in the case of other taxes, the taxes are used to meet the fiscal obligation a country faces. The paper concludes that many countries that have introduced VAT have managed to meet their fiscal obligation due to high revenue contribution that have emanated from it, making the VAT the best tax methods to enable the country to meet their fiscal obligations.
Highlights
The reliance on taxation in human history evolved over the years and governments started to place policies that positioned taxes to play a prominent role in the economic life of their countries
The research question to be addressed or answered in this article is whether or not the Value Added Tax can be used by African countries to meet their fiscal objectives? In answering the question, the article provides a theoretical perspective of the argument, tax and revenue collection, Tax theories and VAT Contribution
It is evident from the above discussion that compliance times in tax remain necessary under any tax system; the reduction of compliance costs will have a stimulus effect on the economy of a country
Summary
The reliance on taxation in human history evolved over the years and governments started to place policies that positioned taxes to play a prominent role in the economic life of their countries. Such policies included those designed to attain distribution of income and wealth and increasing the rate of national economic growth (Fjeldstad & Moore, 2009). The research question to be addressed or answered in this article is whether or not the Value Added Tax can be used by African countries to meet their fiscal objectives? E-ISSN: 1929-7092/19 to countries fiscus, impact of VAT in some African countries and whether or not the VAT improve the countries fiscus obligations?
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