Nigeria slid into a second recession in five years and the worst in almost four decades.
The former vice president, Atiku Abubakar, has advised the Nigerian government to increase taxes on the super-rich in order to raise government income as the county slides into recession.
Nigeria has officially slid into the second recession in five years and the worst in almost four decades.
On Saturday, the National Bureau of Statistics (NBS) announced that the nation's GDP contracted by 3.62 per cent in the third quarter of 2020, better than its 6.10 per cent contraction in the second quarter.
This situation is worsened by the biting effects of the COVID-19 pandemic ravaging the world.
Addressing Nigerians on Sunday morning, Mr Abubakar said he received the news with the heaviness of heart, stating that it could have been avoided if the President Muhammadu Buhari-led administration heeded to calls on "cutting the cost of governance, saving for a rainy day, and avoiding profligate borrowing."
"Yes, the COVID19 pandemic has exacerbated an already bad situation, however, we could have avoided this fate by a 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."
Reeling off the solutions, the opposition leader 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, or 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."
"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."
He 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."
On how to fund the stimulus package, he 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.
"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."
Mr Abubakar also proposed a one per cent 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.
"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," he added.
"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 defaulting, and that will make recession a child's play, because we will lose some of our sovereignty."