Dr. Ahmed Adamu
SIR: The former Vice President of Nigeria, Alhaji Atiku Abubakar has suggested that the rich should be taxed more as a short-term measure to save Nigeria’s economy from total collapse. Is that the right call? What is causing these continuous recessions in recent years? And what is the way forward?
The frequency and severity of the economic recession in Nigeria are attributed to the failure of the government to diversify the economy, cut spending, and apply appropriate tax policies. If the economy is diversified, the frequency and depth of the recession would not have been this much. In fact, the real recession in the country is more severe than just the reported recession. Increasing poverty, psychological depression, and insecurity illustrate the deepest recession being experienced in Nigeria.
If a government cannot provide security, there will not be investment and production, and by extension, there will not be diversification. So, the current administration is to blame for the continuous deepest recession in the country.
Atiku is correct. In the period of economic downturn, it is time for sacrifice to support the collapsing economy. It is wise to tax the rich more because they can conveniently make that sacrifice, and that will set the pace for the Robin Hood Effect. “Robin Hood effect is when the less well-off gain economically at the expense of the better-off.” In fact, taxing the super-rich serves as a payment for the security of their wealth, because, if the economy continues to crash, people will become angrier and might lead to anarchy and destructions.
In the period of anarchy, the rich will not be safe and their wealth will be destroyed. We have seen a spark of such anarchy in recent time. So, paying more tax to save the economy is an investment and protection for their wealth. This will also serve as a redistribution of income, which will help reduce the inequality gaps in the country.
However, before the rich pay more tax, the government must show some level of commitment and credibility. No one will want to pay more tax to a government that spends money on unnecessary things. The rich will not pay extra tax if taxpayers’ money is being used to pay lavish allowances and excess spending by the government officials.
If anyone must pay extra tax, the government must sacrifice first. The government must cut down these excess allowances and spendings to save more. The government must also stop the excessive borrowings and look inward to see what it can save from the cost of governance. That is when the rich and even the poor will be willing to pay extra taxes, because, then we know it will not be wasted. So, it is time for this administration to cut down the cost of governance to save our economy.
This is time to support the lower class, instead of increasing VAT, removing petroleum subsidy, increasing electricity tariff, and introducing new charges on the common man, it is time for social support. Taxing the rich and cutting the cost of governance will enable the government to sufficiently provide social support and spark some economic activities targeting diversification. The government should fix the insecurity at foremost, otherwise, no investment and no production in an insecure nation.
Therefore, Atiku Abubakar’s call for taxing the rich more is one of the best short-term strategies to stabilize the economy. Even though some people will blame this second recession on Covid-19, but the severity and real negative effect of the recession are terrific in Nigeria and the fact that this is not the first one shows the negligence of the government and its poor economic policies.
It is time to heed the advice of patriotic Nigerians, who are passionate about the development of this country, who are willing to always offer suggestions and advice without caring who or which party takes the credit.
- Dr. Ahmed Adamu. Nile University of Nigeria, Abuja.