Does Value Added Tax Burden Reduce Human Capital Development? Evidence from Nigeria? (Published)
This study examined the effect of Value Added Tax (VAT) burden on human capital development in Nigeria, with a specific focus on life expectancy. The study adopted an ex-post facto research design. Secondary data spanning from 1990 to 2024 were obtained from the Central Bank of Nigeria Statistical Bulletin and other relevant official sources. Autoregressive Distributed Lag Model (ARDL) was employed to assess the effect of VAT on life expectancy ratio in Nigeria. The analysis revealed that VAT has a significant negative effect on life expectancy, with a p-value of 0.0533 and a t-statistics of -2.011462. This suggests that the rising burden of consumption taxes like VAT may lower the average lifespan of citizens, likely due to reduced disposable income, increased cost of essential goods and services, and limited access to healthcare and nutrition. The study recommends that the government review the structure and rate of VAT, while strengthening social safety nets and public health investments, to mitigate the regressive effects of VAT on vulnerable populations. These measures are critical to improving the standard of living and advancing human capital development in Nigeria.
Keywords: Human Capital Development, Nigeria, OLS regression, Tax Burden, Value Added Tax, economic wellbeing, ex-post facto design, life expectancy