To say that the cost of living is skyrocketing in Nigeria is an understatement. This is not unexpected in an economy that recorded inflation rate of over 21 per cent.
In an economy that imports practically all manufactured goods, in an economy in which much naira is chasing few dollars, such an economy must witness steep inflation and perennial corrosion in the value of its currency as is the case with the Naira.
Obviously, this high inflation rate means that the naira in your pocket cannot command much anymore. It means that those with fixed wages are in reality taking home salaries that can no longer buy what same amount bought at about this time last year.
Clearly, the rise in cost of living is pushing very many Nigerians into borderline states of both poverty and depression.
For a country that has no social safety net, huge rises in cost of living will not only raise citizen desperation and suffering, but it will also lead to increases in crime and criminal behaviour.
A well known axiom is that a hungry man is an angry man. Poverty is the main driver of criminal behaviour in much of North East and North West. You cannot have safety or security in any space where the majority of people live below the poverty line.
Highlights of the 2022 Multidimensional Poverty Index survey by NBS and others revealed that 63% of persons living within Nigeria (133 million people) are multidimensionally poor. This is another way of saying that 133 million people are either unemployed or under employed. It is therefore essential that we increase production in the country so that more people can be employed.
Without reducing importation, local production cannot thrive. Only local manufacturing can mop up the unemployed and relate the economy through the expenditure by the employed.
You cannot raise the profile of an economy by handing out petty cash gifts to the unproductive sector. You grow an economy, and employment, by supporting the productive sector and encouraging them through tariff reduction and other incentives.
The adoption of performance-related pay in the public sector is also seen as an option for government to help improve overall productivity.
In a changing world where technology is a major driver of economic growth, it is necessary that players in that sector are vigorously encouraged by the provision of grants, subsidies or tax incentives. Tax credits also help firms to upgrade their technology and engage in effective research and development.
Many leaders in Nigeria seem to have forgotten that education is a major promoter of productivity and increases in economic wellbeing of nations. Better skills and training enable workers to exploit their talents and abilities and produces higher quality labour.
The use of technology is important in determining the level of productivity in manufacturing industries. The extent of innovation in new production methods or processes. The transfer of knowledge and technology between countries through open trade relationships and foreign direct investment between countries.
Productivity is also affected by the cost of bank transactions and multiple taxations on businesses. According to the National Tax Policy Document, multiple taxations occur where the tax is levied on the same person in respect of the same liability by more than one state or local government council.
Multiple taxations manifest in many ways: Various unlawful compulsory payments are collected by the local and state governments without appropriate legal backing through intimidation and harassment of the payers. Collection of it is characterized by the use of stickers, mounting of roadblocks, and use of revenue agents/consultants including motor-park touts; situations where a taxpayer faces demands from two or more different levels of government either for the same or similar taxes. A good example here is the administration of the Value Added Tax (VAT) and Sales Tax simultaneously. Where the same level of government imposes two or more taxes on the same tax base. A good example is a payment of companies income tax, education tax and technology levy by the same company; and cases whereby various government agencies “impose taxes” in the form of fees or charges.
Federal Government should bring sanity into the tax administration of the country to avert the total collapse of the economy due to tax suffocation of businesses. Multiple taxations have affected the operations of many companies negatively, and as such arousing criticisms. According to the experts, the tax system depletes returns on investment, erodes the capital base of listed firms, and subsequently triggers businesses to collapse.
Aside multiple taxation, government has not been paying attention to the welfare of Nigerians even though section 14(2)(b) of the Nigerian Constitution of 1999 (as amended) provides that, “the security and welfare of the people shall be the primary purpose of government.”
When the Nigerian government at all levels prioritizes the welfare of the people the workers would be paid wages that matches inflation rate so that the average workers take home pay can really take him or her home. The government should also run the economy better to provide a better living standard for all Nigerians who may not be want to be part of 8am to 5pm jobs but preferred to run their own small businesses. It is common knowledge that small businesses have been the engine of economic prosperity around the world including China.
The All Progressives Congress (APC) promised to protect the common man when it was seeking power in 2015, sadly, almost eight years later, the common man has been shortchanged more than ever before. His standard of living has nosedived while the cost of living has skyrocketed beyond the wildest imagination.
In this election year let me end this column this week by asking the question that Republican presidential candidate in 1980, Ronald Reagan posed to all Americans: “Are you better off today than you were eight years ago?”
MAY NIGERIA REBOUND
