Chuks Okocha in Abuja
Former Vice President Atiku Abubakar yesterday prescribed how Nigeria can exit its second recession, proposing a 15 per cent tax on those he described as super rich and on luxury items.
In a statement, he issued, Atiku said: “We cannot afford hand wringing and navel-gazing. We must act now by taking necessary and perhaps painful actions.
“Yes, the COVID-19 pandemic has exacerbated an already bad situation. However, we could have avoided this fate by disciplined and prudent management of our economy.
“Be that as it may, it serves no one’s purposes to quarrel after the fact. We must focus on solutions. Nigeria needs critical leadership to guide her back to the path of economic sustainability.”
Atiku added that given the current economic reality, the proposed 2021 budget presented to the National Assembly on October 8 is no longer tenable.
According to him, Nigeria neither has the resources nor the need to implement such a heavy budget.
“The nation is broke, but not broken. However, if we continue to spend lavishly, even when we do not earn commensurately, we would go from being a broke nation to being a broken nation,” he warned.
He recommended that every non-essential line item in the proposed 2021 budget must be expunged.
Atiku identified estacodes, non-emergency travel, feeding, welfare packages, overseas training, new vehicle purchases, office upgrades and non-salary allowances as some of the items that should be removed from the budget.
“Until our economic prospects improve, Nigeria ought to exclusively focus on making budgetary proposals for essential items, which include reasonable wages and salaries, infrastructural projects and social services (citizenry’s health, and other human development investments).
“Additionally, we have to stimulate the economy, by investing in human development and increasing the purchasing power of the most vulnerable of our population. Only a well-developed populace can generate enough economic activity for the nation to exit this recession,” Atiku explained.
He said Nigeria must invest in those most likely to be impacted by the effects of the recession, the poorest of the poor, “as well as stimulating the economy, this also ensures that they do not slip further into extreme poverty.”
The former vice president recommended a stimulus package, in the form of monthly cash transfer of N5,000 to every bank account holder, verified by a Bank Verification Number (BVN), whose combined total deposit in the year 2019 was lower than the annual minimum wage.
He stated: “How will this be funded? By more profligate borrowing? No. I propose a luxury tax on goods and services that are exclusively accessible only to the super-wealthy – tax on the ultra-wealthy to protect the extremely poor.
“A practical approach to this is to place a 15 per cent tax on all business and first-class tickets sold to and from Nigeria, on all luxury car imports and sales, on all private jets imports and service charges, on all jewellery imports and sales, on all designer products imported, produced or sold in Nigeria, and on all other luxury goods either manufactured or imported into Nigeria, with the exception of goods made for export.
“The proceeds of this tax should be exclusively dedicated to a Poverty Eradication Fund, which must be managed in the same manner as the Tertiary Education Trust Fund, or the Ecological Fund,” he stated.
Atiku also proposed legislation by the National Assembly mandating all international oil companies operating in Nigeria and international airlines doing business in the country to pay a one per cent poverty alleviation tax from their profits, which should also go towards the proposed Poverty Eradication Fund.
“It is inhumane for us as a nation to increase the cost of goods and services that affect the poor while keeping the cost of luxuries fairly stable. We must flip this, and flip it immediately.
“Nigeria must stop borrowing for anything other than essential needs. Again, for the avoidance of doubt, borrowing to pay salaries or to engage in white elephant projects is not an essential need. This is particularly important as we need cash at hand because the world and our economic and development partners are also focused on helping their home economies overcome the effects of COVID-19. We must be our own saviours.”
He added that more borrowings will put more pressure on the nation’s finances as Nigeria will need cash to make interest and principal payments.
He explained that meeting debt obligations will rob Nigeria of cash to invest in the economy.
“If we keep borrowing, we stand the risk of defaulting and that will make the recession a child’s play because we will lose some of our sovereignty,” he warned.
He urged the administration of President Muhammadu Buhari to accept its limitations and consider others’ ideas, without caring who the messenger is.