ABSTRACT:

The study examined the appropriateness of Modified Value Added Tax (MVAT) with respect to equity, efficiency, acceptability and resource allocation, in Nigeria between 1994 and -2003. It established that the system of taxation has been regressive, though very efficient. The study found that MVA T had not only generated significant revenue, it possesses the potential to generate more revenue as well as reduce the current over-dependence on oil revenue. Although, the system of computatian was relatively simple, the level of acceptability was rather low  given the high level instability of the sharing formula. In our opinion this could impair the sustainability of the tax system. A correlation was found between MVAT and inflation rate as the tax was found to have stimulated inflation rate. Also, the MVAT was found to have negative impact on private consumption and consequently welfare of the inhabitants of Nigeria.