Value Added Tax (VAT), Inflation, and Manufacturing Sector Output in ECOWAS Sub-Region

Abstract

This study was focused on the value added tax, inflation, and manufacturing sector output in ECOWAS countries. The objective of this paper is to investigate the relationship between value added tax (VAT) and inflation on manufacturing sector productivity in ECOWAS countries The National Bureau of Statist ics and the CBN statistics bulletin and World Bank Data bank were utilized to provide aggregate time series data for the years 2000 to 2022 the research study views ten (10) ECOWAS countries such as; Nigeria, Ghana, Burkina Faso, Benin, Cape Verde, Liberia, Mauritania, Senegal, Sierra-Leone, and Mali. Panel ARDL model, and panel GMM estimator method was used to analyze the data. The results of our Panel GMM reveals that that exchange rate's coefficient had a negative relationship with manufacturing Productivity. The depreciation of the Naira to the US Dollar exchange rate discourages firm productivity. Value added tax and inflation coefficient had a negative relationship with manufacturing Productivity. Based on our findings we therefore recommend that as far as the banks are concerned, the authorities should ensure that it regularizes the implementation of Value Added Tax in order that it may not be accused of discriminating practices against banks. The Government should apply strictness in the enforcement activities of Value Added Tax just as it has done to the financial institutions in recent years. By this market force should be allowed to determine the Value Added Tax chargeable, but with or close monitoring.