Abstract
The Objectives of this work is to find out the extent to which value added tax (VAT) has succeeded over
sale tax in bolstering government revenue and also the revenue elasticity of VAT This was achieved by
determining the nature of relationship between the VAT and government revenue, and the amount of
revenue collected through VAT over the years under study. Regression analysis was used and it was
found out that elasticity of VAT is greater than unity. Meaning that 1 percent increase in value added
increases total revenue by 1.264 percent. The t-test and F-test also proved that VAT has a positive and
significant contribution to total revenue. It was observed that company profit tax and customs and
exercise duties have negative coefficients which show that their contribution to government revenue
has been on the decrease. It was also observed that the negative coefficient psychologically affect the
consumption expenditure of individuals and household. This lead to the recommendation that
government should review the policies on trade in order to ensure positive contribution to total tax
revenue.