This paper attempts to examine the relationship between Value added tax and Economic development: in Nigeria. It is expected that this study will be of immense use to both the Government and general public. The study covered 18years period between 1994 and 2012. Multiple regression was used to analyse the data gotten from Central Bank of Nigeria (CBN) Statistical Bulletin of various years. The result of the multiple regression showed a negative significant relationship between value added tax revenue and Gross domestic product. Also, the result showed a positive significant relationship between Gross domestic product and Total consolidated revenue. We recommend that federal government should educate the general public more on the essential of VAT payments and also that machineries should be put in place to ensure that VAT revenue does reduce as this will help foster economic development. Also, VAT rate should be increased as it will account for more revenue to the government.