Dear Subscriber,

The new VAT rate of 7.5% (old rate: 5%) is to kick in immediately. The knock on effect on consumer prices is likely to drive up inflation from the estimated rate of 12% in December to 13% in January. However, the state governments will now be in a stronger position to meet their wage and other obligations. Consumer disposable income will be negatively affected in the short run whilst aggregate demand for commodities will fall.

The good news is that SMEs with turnover lower than N25million will be tax exempt.

In this publication, these issues were discussed by analysts at the FDC Think Tank on Channels TV Business Morning programme today.

Enjoy your read!