ABSTRACTValue Added Tax (VAT) is a consumption tax on the value added to a product in the process ofproduction. Like all other indirect taxes, it is a tax that targets the final consumer of goods and services.The main purpose of VAT in Nigeria is to increase government (state and Local) revenue from the non-oilsector thereby reducing the government’s dependence on oil sales and the budget deficits. In thisresearch work my aim is to determine the stabilizing roles of VAT in the Nigerian economy. The studyemployed multiple regression analysis as a method of study using the ordinary least square (OLS)regression technique in estimation. Result of the analysis revealed that price level is not stimulated byVAT in Nigeria.