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Prices rise as traders lament 7.5% VAT

Published by on February 9th, 2020.


Katangua market

By Bose Adelaja

Following the take-off of 7.5 per cent Value Added Tax, VAT, prices of goods across markets in Lagos have increased, a survey by Sunday 4Nigerians revealed.

Surprisingly many traders hardly knew what VAT meant, yet they increased the prices of food items.

Although the increase in price began on February 1, 2020, some dealers told Sunday 4Nigerians that some companies started sensitising their distributors since January 2020.

A visit to some of the markets showed that there was an increase in the prices of many products as traders claimed some companies now hide under the guise of VAT to increase prices of some items.

At Balogun Market, Lagos, the price of hides and skin recorded 25 per cent increment. For instance, a handbag that was sold for N5,000 in December 2019, now goes for N6,500. The prices of kitchen utensils, electronics, and gift items recorded about 12 per cent increment.

Similarly, household items like rubber band, sponge, shopping bags, and plates, among others, recorded about 15 per cent increase in price, but the prices of lanterns, toothpick, and sellotape among others were not affected.

ALSO READ: 7.5% VAT deductions on voice calls is under FIRS ― Pantami

At Ketu plastic market, prices of plastic products increased just as traders lamented the scarcity of some items.

Foodstuff

At the foodstuff section in Oyingbo Market, some food items were yet to record any increase in their prices as a bag of local rice was still between N15,000 and N18,000 while a bag of foreign rice sold between N21,000 and N28,000.

Similarly, one  Derica  cup of beans sells for N100 and above while a plastic paint bucket was found to be between N6,000 and N7,000.

As for palm oil, five litres was sold at N1,700 and above depending on the quality while the price of a bottle of groundnut oil was discovered to be N350 and above.

At Mile 12 Market, Agboyi/Ketu area of Lagos, the price of onions was relatively stable as a sack sells for N23,000 and above depending on the size and quality.

The price of vegetables remained the same as a basket of  Rodo, Tatase, Bawa, and tomatoes costs N12,000 and above depending on the quantity and size.

At Sabo Market, Ikorodu, the unit price of detergent ranges between N80 and above depending on the brand while the price of seasonings recorded about 10 per cent rise.

READ ALSO: Telcos hike tariffs for calls, data as FG begins 7.5% VAT

Building materials are not left out as the price of cement is now N2,650 as against N2,550 while a length of iron rod costs N2,100 as against N1,800.

Lamenting the situation, the President, Market Leaders and Traders Association of Nigeria, popularly called Traders Rights

Protection Initiative, Lagos State Chapter, Mr. Christopher Okapala, said VAT has a multiplier effect on goods and services ranging from haulage, transportation and vehicle parts.

Multiplier effect

He said the situation has negatively affected turnover, thereby obstructing regular trading activities in Nigeria.

‘’immediately the Federal Government announced its intention to increase VAT, some manufacturers hoarded their products and created artificial scarcity in the market. Plumbing materials like WC, hose and pipes were mostly affected and this has affected patronage.”

Speaking with Sunday 4Nigerians, Chairman, General Leather Bags Association, Balogun Market, Mr. Azubike Nwachukwu, said the VAT increment is gradually reducing sales.

He said: ‘’Many of us have taken it upon ourselves to educate our customers who don’t understand the meaning of VAT and how it can affect the production of goods. Some of them who have exhausted their stock did not replace it but kept their money in banks thinking that the price will reduce any moment. The VAT increase is a government policy and there is little anybody can do to reduce it.” he said.

Vulnerable segment

At Ladega Market in Ikorodu, a member of the Association of Igbo Traders, Mr. Henry Ohanugo, said VAT increase has ripple effects on the prices of cosmetics and beauty products.

‘’This has brought between N500 and N1, 000 increase per carton and about N20 increase per unit on some of the products,” he added.

Recall that the Minister of Finance, Zainab Ahmed, had in September 2019, announced the increment of VAT from five percent to 7.5 per cent.

To ensure that traders do not exploit buyers, especially the vulnerable segment of the society, government listed some items that were exempted from the increased VAT.

The exemptions include the following: Basic food items like additives, bread, cereals, cooking oil, culinary herbs, fish, flour and starch, fruits, fresh or dried, live or raw meat and poultry, milk, nuts, pulses, roots, salt, vegetables, water,natural water and table water,

Others are locally manufactured sanitary towels, pads or tampons, services rendered by microfinance banks, tuition relating to the nursery, primary, secondary and tertiary education.

4Nigerians News Nigeria.

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