Vibrations from the sudden removal of petroleum subsidy will continue to impact positively and negatively on the Nigerian economy for some measured time. The government would see it as a relief as the fear of getting money to pay for the subsidy as and when due is no longer its business

he inflationary trend that follows the fuel subsidy removal and unification of the foreign exchange market is not unexpected. When former President Muhammadu Buhari removed the subsidy around 2017, the inflation rate jumped to double digit and the economy entered recession such that the policy was tacitly reversed. The subsidy mafia was allowed to intervene to retain their control. We have to learn lessons from that and make sure the present policy is not reversed. The mafia must be kept in check. The government must let people know that it is aware that there must be inflation but it is being taken care of through new social and economic policies gradually being introduced with positive effects showing up in the next few weeks

What are the medium and long-term policies? When people are abreast of these policies through public information, it will be difficult for anyone to deceive and derail their support for government.

That brings us to the issues surrounding taxes and revenue generation. I have explained in this column in the past that many advanced countries rely heavily on tax to finance their budgets but developing countries are being wrongly accused of collecting low taxes relative to total revenue because they are imposing low tax rates on citizens. There have therefore been arguments that these countries must increase their tax rates. The same thing is often said about low saving in developing countries and the need to improve on domestic saving

Both saving and tax are withdrawal from an economy. This makes them have negative impacts on the economy unless they are returned to the economy as investments and subsidies respectively.

ore importantly, both of them are derivatives of income. This implies that growing income will result in an increase in saving and taxes collected. Opposite occurs for low income such that when countries are referred to as low-income economies, we should expect low saving and taxes. It is

The whole processes of tax administration in those countries obey Adam Smith’s canons of taxation and its extension. Smith had told us that good tax collection must obey four principles namely; equity, certainty, convenience, and economy. The extensions of the canons are canons of productivity; elasticity; simplicity, and diversity. Tax administrators understand what these concepts mean.

More taxes mean less money to meet basic needs or less money for consumption of goods and services. Less consumption in an economy will dampen production and negatively affect output and employment. Consequently, company and personal income taxes fall or revenue to the government from taxes also falls.

The implication is that the country has been borrowing to meet monthly obligations and the essence of the report is to caution the country from contracting more loans. Then why are they dangling loans before the government again? One suspects that the World Bank’s unexplained position was instrumental to the visit from the American Bank. Government should resist new borrowing by all means. We shall look into this soon.

The implication is that the country has been borrowing to meet monthly obligations and the essence of the report is to caution the country from contracting more loans. Then why are they dangling loans before the government again? One suspects that the World Bank’s unexplained position was instrumental to the visit from the American Bank. Government should resist new borrowing by all means. We shall look into this soon.