The paper examined the impact of value added tax on revenue generation in Nigeria. The Secondary Source of data was sought from Central Bank of Nigeria statistical Bulleting (2010), Federal Inland Revenue Service Annual Reports and Chartered Institute of Taxation of Nigeria Journal. Data analysis was performed with the use of stepwise regression analysis. Findings showed that Value Added Tax has statistically significant effect on revenue generation in Nigeria. The study recommends that there should be dedication and apparent honest on the parts of all agents of VAT with respect to the collection and payment and that government should try as much as possible to improve on the way of collecting value added tax.

CHAPTER ONE

1.0 INTRODUCTION
This is the introductory chapter of the chapters. is briefly explains the background of the study, statement of the problem, objectives of the study, research questions, significance of the study, scope of the study, limitations of the study and definition of terms.

1.1 BACKGROUND OF THE STUDY
One of the recurrent problems of the three tier structure of the government in Nigeria is dwindling revenue generation as characterized by yearly budget deficits and insufficient funds for economic growth and development. This economic reasoning emphasized the revenue need of government and indicates that, apart from strengthening the existing sources of revenue, it is also necessary for government to diversify its revenue base in order to meet its constitutional responsibilities. Myles (2000) states that financial capacity of any government
depends among other things, on its revenue base, the fiscal resources available to it and the way these resources are generated and utilized. It is therefore, the duty of the government to adequately mobilize potential revenue across the country to prevent economic stagnation. This mobilization involves the adoption of economically and politically acceptable taxes that would ensure easy administration, accounting, verification, auditing and investigation based on the equality, neutrality and other attributes of a good tax. Consumption taxes have a wider coverage since the cause of adverse variance can be adequately controlled under proper administration (Leach,2003). The revenue generated from consumption taxes can help to boost the financial base of any economy. This however involves exploiting the potential and adopting the type of consumption tax that will recognize the tax payers as utility minimizing individuals and safeguarding their evading behaviour. The essential consideration I choosing a consumption tax option from other tax options includes; assessment of administrative feasibility of each tax and determining its relative revenue potentials, its relative revenue potentials, its degree of voluntary compliance, its relative neutrality, its equity essential for regressively and the efficiency of these criteria, one can easily see under lying reasons why government replaced a Retail Sales Tax (RST) with value Added Tax (VAT) as consumption tax.
Thus, the introduction and full recognition of the potential value of VAT in revenue generation after planning its adoption into the Nigerian tax system has become a controversial issue that forms debate among several authors that the purpose of the introduction of the value added tax as on of the method of taxation in Nigeria economy has not yet been known. In view of this, the paper work intends to avert all the prevention deficiency deduced by the recent author and thereby revealed the benefits of the value added tax asour revenue generation in this country (Nigeria). This would be achieved by the effects or roles of VAT on Nigerian economy since it inception on January 1994 to date and how it has superseded its predecessor (sale Tax).

1.2 STATEMENT OF THE PROBLEM
In Nigeria, value added tax is one of the instruments the Federal government introduced to generate additional revenue. Yet, most prominent Nigerians and interest groups had spoken against its introduction. It would appear that VAT is froth with some problems. After its adoption into the Nigeria tax system, it has become a controversial issue that generates debate among several authors like Naiyeju and (2009) that the purpose of introducing value added tax as one of the methods of taxation in Nigeria economy has not yet known. For the purpose of these, this paper work shall examine the implication of value added tax on revenue generation in Nigeria and to provide reasonable solutions and recommendations that will be geared to reveal the benefit of VAT in Nigeria macro economy.

1.3 OBJECTIVES OF THE STUDY
The general objective of this study is to examine the impacts of value added tax on revenue generation in Nigeria. However, the specific objectives are:

1. To examine the relationship between value added tax and revenue generation in Nigeria.
2. To establish the effects of value added tax on revenue generation in Nigeria.
3. To investigate and ascertain the role literacy level plays in the operation of VAT in Nigeria.

1.4 RESEARCH QUESTION
The following research questions are formulated to pilot this research work:

1. Are there any relationships between value added tax and revenue generation in Nigeria?
2. Does value added tax has effect on revenue generation in Nigeria?
3. Do Federal Government tries to investigate and ascertain the role literacy level plays in the operation of VAT in Nigeria.

1.5 SIGNIFICANCE OF THE STUDY
It is hoped that the findings of this study would be beneficial and of great importance to the Federal Inland Revenue Service which is saddled with the statutory responsibility of collecting VAT. It will also benefit the federal government whose resources are channeled towards the collection of VAT and also the general public, who consumes VATABLE goods and services. In general, this study will broaden the knowledge people have on VAT and the level of how responsive are the general public in the settlement of VAT and areas which may lead to improvement in the general collection and remittance of VAT.
This study will also go a long way to fill the missing links in the analysis of VAT vis-a-vis sales tax in the existing tax literature.

1.6 SCOPE OF THE STUDY
The Nigeria tax system is known to be prone to continual changes which in itself necessitate changes in the administration of the tax. This study considers the factors that aid the collection of VAT and its contribution to the economic development of Nigeria. The analysis of investigation will focus on Federal Inland Revenue Service Development Mobilization, Allocation and Fiscal Commissions well as the office of the Economic Adviser in the Presidency. The study will pay particular attention on the VAT as well as economic development of the country.

1.7 LIMITATION OF THE STUDY
The researcher encountered a lot of hindrance and problems in the course of carrying out this research work.Among the major problems is the difficulties in
getting and gathering information and others which include the following:
1. FINANCE
Due to the nature of office and business within the scope, the researcher spends a lot of money on visiting, traveling from one location to another, from one office to the other and even had to repeat a visit more than three times to seek for information, all these involves money considering the financial constraint of the researcher and limited resources available to her.
2. SOURCES OF INFORMATION
Many registered and non-registered business owners were reluctant to give out or provide information about the research, since they believe that tax payment is something very confidential and therefore could not open up to the researcher.
3. INADEQUATE RECORD KEEPING
Some of the respondents visited were unable to present complete and comprehensive records of their business .while some were not keeping proper records of their business activities and as such could not give adequate and correct information on the effect of vat on their businesses rippling on the economy of Nigeria.
4. TIME
Time constraint has been another vital limitation and obstacle towards effective realization of the main objectives of this study. Time was really not on my side since I have to combine the little time left with my academic work and preparation.

1.8 DEFINITION OF TERMS
It is the researcher’s intention that this project work will be read and understood by all that may be interested in it either officially or ordinary. Hence, the need for highlighting the important terminologies used cannot be over-emphasized. The Decree 102, which established the Value Added Tax (VAT) came into being in the year 1993. The Decree spelt out the following terms unless the context otherwise requires. As far as this project is concerned, the meaning is just as they are in Decree.
“VATABLE PERSON (REGISTERED PERSON)”: This refers to a manufacturer, wholesaler, an importer and a supplier of taxable goods and services. As a taxable person, he is a person registered under section 8 of the Decree.
“AUTHORIZED OFFICER”: This means an officer who has been authorized by the board of Inland Revenue to perform any function under or in pursuance of this Decree.
“BOARD”: This is the Federal board of Inland Revenue.
“CHAIRMAN”: This means the chairman of the Federal Board of Inland Revenue.
“COMPANY”: Company here as defined under the Companies and Allied Matter Decree 1990 and a cooperate body that may be formed under any other written law and include any association, whether incorporate in or outside the country (Nigeria).
“IMPORTER”: This means a person who imports taxable goods.
“INVOICE”: This means any document issued as an evidence of demand for payment.
“MANUFACTURER”: Means any person who engages in the manufacturing of goods. It also includes a person who has manufactured for him or on his behalf by other goods made to his specification or design.
“MANUFACTURING”: Means the process by which a commodity is finally produced including assembling, packaging, bottling, repackaging, mixing, blending, grinding, cutting, bending, twisting and pining any other similar activity.
“OWNER”: Means in respect of any goods, aircrafts, vessel, vehicles, plant or other goods, a person other than an officer acting officially, who hold out himself to be the owner, manufacturer agent or person in possession of or beneficially interested in, or having control of or power of disposition over goods, aircraft, vehicle, plant or other goods.
“SUPPLY OF SERVICES”: Means any services provided for consideration.
“TAX PERIOD”: Means one calendar month commencing from beginning of the month to the end of that month.
VALUE ADDED TAX: This is a multi-stage consumption tax collected on sales at all stage of sales and distribution in the operation VAT each seller issues an invoice going the amount of VAT paid which become a credit for further set off it item is used as input in the chain of production or distribution.
INPUT TAX: The input is what is changed on business purchase and expenses.
These include goods and services supplied in Nigeria or imported.
OUTPUT TAX: is the tax that is due on VATABLE supplied. It is derived by multiplying the tax of the aggregate supply derived by the tax rate.
CONSUMPTION VAT: This type of VAT is where capital purchase are treated the same way as the purchase of any input. This treatment of capital input is equivalent to expensing.
THE INCOME VAT: Under the income VAT the tax paid on purchase of capital input as amortized, that is credited against the firm VAT liability as inputs.
THE GROSS PRODUCT VAT: Under the gross product purchases are allowed against the firm output tax in other words the taxable firm is treated as a final consumer of all its capital input.