Recession: Tax the Ultra-wealthy to Protect Poor Nigerians – Atiku Advises Buhari

Following the sliding of Nigeria into a second recession in five years and the worst in almost four decades, former Vice President now opposition leader, Alhaji Atiku Abubakar has advised the government of President Muhammadu Buhari to increase taxes on the super-rich in order to raise government income.

The National Bureau of Statistics (NBS) had on Saturday, announced that the nation’s gross domestic product (GDP) contracted by 3.62 percent in the third quarter of 2020, better than its 6.10 percent contraction in the second quarter.

While revealing that he received the news with the heaviness of heart, Atiku, who ran against President Buhari in the 2019 election, said on Sunday morning that the recession could have been avoided if the current administration heeded his calls on “cutting the cost of governance, saving for a rainy day, and avoiding profligate borrowing.”

“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,” he said.

While reeling off solutions to the economic downturn, he advised that the proposed 2021 budget of over N13 trillion should be reviewed downward, describing it as a “luxury heavy budget.”

“For a start, the proposed 2021 budget presented to the National Assembly on Tuesday, October 8, 2020, is no longer tenable. Nigeria neither has the resources, nor the need to implement such a luxury 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. 

Also Read: Nigeria Enters “Technical Recession”, Deepest Since 1987

“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.”

Atiku further advised that a stimulus package be made available for Nigerians whose “combined total deposit in the year 2019 was lower than the annual minimum wage”.

“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.

“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 ₦5,000 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.”

The PDP bigwig, while sharing how to fund the stimulus package, suggested that a luxury tax be placed on goods and services accessible only to the extremely wealthy individuals.

“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.”

For instance, “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,” he said.

Also Read: FGN, 2020 Finance Bill Will Not Increase Taxes

“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.”

Atiku also proposed a one percent poverty alleviation tax to be legislated by the National Assembly on the profits of every international oil company and airlines operating in Nigeria, which should also go towards the Poverty Eradication Fund.

He reiterated that the country must stop borrowing to pay salaries or fund white elephant projects, as it is important for the resuscitation of the battered economy.

According to him, “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.

“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.”