THE EFFECT OF SUBSIDY REMOVAL ON VAT REVENUE IN NIGERIA: A COMPARATIVE PRE- AND POST-ANALYSIS

Abstract

The removal of fuel subsidies in Nigeria has been a subject of intense debate, with policymakers advocating that the move would enhance government revenue and reduce fiscal burdens. This paper investigates the impact of subsidy removal on Value Added Tax (VAT) revenue in Nigeria by conducting a pre- and post-subsidy analysis. The study employs secondary data spanning six months before and after the subsidy removal, utilising descriptive and inferential statistical methods to analyse trends and draw comparisons. Findings reveal a significant increase in VAT revenue post-subsidy removal, attributed to inflationary effects and heightened consumer prices. The study concludes that while subsidy removal boosts VAT collection, its socioeconomic implications necessitate complementary policies to mitigate the adverse impact on citizens