This research was carried out to investigate the effects of ‘Tax Revenue Allocation on Consumption’ as the economy
grows and to determine the dynamics (stability) of the various tax revenue allocations to the Calabar Municipal
Council with predetermined time covering a period of 23 years (1980 to 2002), and to partly observe inter-temporal
changes, if any, in the behavior of revenue flexibility coefficients. Secondary data of tax revenue records were used
for the study. The data collected was analyzed using the ordinary least square method to evaluate the impact of tax
revenues allocation to the local government and its effect on consumption tax (VAT ) also known as sales tax levied
on the value added at each stage of production or distribution of goods and services and paid by the ultimate
consumer. The emerging results, established that there was not sufficient tax revenue generated within the period of
study through consumption (VAT), hence the inflexibility of Federal Government Tax Revenue Allocation, State
Government Tax Revenue Allocation and Internally Generated Tax Revenue with respect to consumption. The
implication of this result was that consumers could not easily shift their consumption due to the introduction of
value-added tax by the federal, state and local governments. The study ended by making some recommendations
thus: Local Governments should mobilize more revenue within their domain and in order to enhance the economic
growth at the rural level, the federal and state government should discourage any fiscal policy that could cause a
decline in revenue allocation to local government.
