Value Added Tax and Consumer Behaviour in Southwest, Nigeria

Abstract

This study examines how the implementation of Value Added Tax (VAT) shapes consumer
behaviour in Southwest Nigeria, with particular attention to companies supplying consumer goods
and services. Building on consumer behaviour theory and taxation impact frameworks, this
research uniquely investigates the interplay between VAT policies and purchasing patterns in an
emerging market context marked by evolving fiscal regulations. Using an ex-post facto design,
data from secondary sources including financial reports of seven publicly listed Nigerian
companies were analyzed to explore how VAT influences consumer price sensitivity, buying
frequency, and product selection. Results indicate that VAT significantly alters consumer
purchasing decisions by affecting perceived product affordability and overall consumption
preferences. These findings suggest that companies must enhance VAT compliance and foster
transparent pricing strategies to sustain consumer confidence and mitigate adverse effects on
purchasing power. Moreover, policymakers are urged to periodically review VAT structures to
balance revenue generation with consumer welfare, ensuring the tax system supports both
economic growth and equitable consumer outcomes