To exit the recession, the former Vice President proposed the setting up of a Poverty Eradication Fund (PEF) which shall be funded from taxing the ultra-wealthy, 15 per cent tax on luxury items and services and 1 per cent poverty alleviation tax on international oil companies operating in Nigeria
Former Vice President Atiku Abubakar has, again, upbraided the Buhari administration for plunging Nigeria into another hole of recession, saying the administration’s profligate tendencies were largely responsible, and not the effect of the Covid-19 pandemic.
In a series of tweets on his verified handle on Sunday morning titled We Must Exit This Recession With Precision, Atiku said the Buhari administration should swallow its pride, accept its limitations and open its minds to fresher and new ideas from those outside the administration.
He said: “It is with a very heavy heart that I received the confirmation that for the second time in five years,#Nigeria has entered into another #recession. Heaviness of heart, because this could have been avoided had this administration taken heed to patriotic counsel given by myself and other well-meaning Nigerians on cutting the cost of governance, saving for a rainy day, and avoiding profligate borrowing
“Yes, the COVID19 pandemic has exacerbated an already bad situation, however, we could have avoided this fate by a 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”, he said.
He argued that the proposed 2021 budget recently presented to the National Assembly is no longer workable, given the current economic scenario, adding that the State does not have the cash or the resources to fund such a lavish and luxury 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. As a matter of importance and urgency, every non-essential line item in the proposed 2021 budget must be expunged. For the avoidance of doubt, this ought to include estacodes, non-emergency travel, feeding, welfare packages, overseas training, new vehicle purchases, office upgrades, non-salary allowances, etc.
“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).
He canvassed heavy investment in human capital with a view to building the purchasing power of the vulnerable of in the society, adding that “Only a well-developed populace can generate enough economic activity for the nation to exit this recession.
“We 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. For example, a stimulus package, in the form of monthly cash transfers of ₦5000 to be made to every bank account holder, verified by a Bank Verification Number, whose combined total deposit in the year 2019 was lower than the annual minimum wage.
“Now, 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. A tax on the ultra-wealthy to protect the extremely poor.
“A practical approach to this is to place a 15% 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.
“I further propose that a 1% poverty alleviation tax should be legislated by the National Assembly on the profits of every International Oil Company operating in Nigeria, and international airlines doing business in Nigeria, 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.
“And above all, 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 COVID19. We must be our own saviours. The more we borrow, the more we will need cash to make interest and principal payments, and the less cash we will have to make necessary investments in our economy and our people. If we keep borrowing, we stand the risk of default, and that will make recession a child’s play because we will lose some of our sovereignty.
“I urge the administration of President Muhammadu Buhari to swallow its pride, and accept its limitations, so that they can open their minds to ideas, without caring who the messenger is.
“For as Deng Xiaoping said “It doesn’t matter whether the cat is black or white, so long as it catches mice.”#