When it rains, it pours
It is raining taxes! The plethora of taxes across various sectors of the economy has left Nigerians worried about their economic prosperity in 2020. A month to Christmas and the Nigerian consumer is worried about the spike in the price of rice, rising tax burden and falling external reserves.
The justification for the numerous taxes is to increase the government’s non-oil revenue and Milton Friedman’s statement that ‘ain’t no such thing as a free lunch’. Whilst this may be so, policymakers must remember Adam Smith’s recommendations of a good tax system – equality, certainty, economy and convenience.
EIU’s outlook on the Nigerian economy appears gloomy. It is of the view that forex restrictions and the VAT increase could push inflation higher in the coming months. Recent data also shows that two of the five states with the highest IGR & FAAC allocations, which are oil-producing states, have been unable to convert higher revenue into a better quality of life for their citizens. Rivers and Delta state have high revenue, high debt but paradoxically have high inflation and unemployment rates. This is a wakeup call for oil-producing states.
In this edition of the LBS Breakfast session, Bismarck Rewane and the FDC Think Tank put these economic and political issues in perspective for the benefit of your business and portfolio strategy.