The Impact of Value Added Tax on Consumer Spending in Enugu State

This research examines how Value Added Tax (VAT) influences consumer spending behaviour in Enugu State, South East Nigeria. Since its introduction and subsequent rate adjustment, VAT has remained a cornerstone of Nigeria's indirect taxation system, yet its distributional effects on household expenditure patterns are not adequately studied at the state level. This study adopts a descriptive survey approach, targeting 180 adult consumers across urban and semi-urban markets in Enugu metropolis. Data are collected using structured questionnaires covering household income levels, consumption habits, and perceived burden of VAT on essential commodities. Secondary data on VAT revenue and consumer price indices are sourced from the Federal Inland Revenue Service and the National Bureau of Statistics. Analysis employs frequency tables, means, and Pearson correlation coefficients. The study anticipates that low-income households bear a disproportionately higher VAT burden relative to their income, particularly on food items, clothing, and household goods. It is also expected that consumer awareness of VAT-exempt goods is generally poor, resulting in over-payment in informal markets. The study recommends that government enforce the VAT exemption list more rigorously, particularly for basic food items, and invest in public enlightenment campaigns to help consumers identify exempt goods. A review of the VAT rate structure to introduce tiered rates for luxury goods is also proposed. Keywords: value added tax, consumer spending, household income, Enugu State, indirect taxation.