FISCAL POLICY A TOOL TO CUSHIONING EFFECT OF SUBSIDY REMOVAL IN NIGERIA
A piece by Henshaw Oligbi
A Finance and Economy Expert.
The reality of effects of fuel subsidy removal is done on Nigerians as prices of goods and services has skyrocketed in recent time beyond the reach of an average citizen and none citizens alike, in reaction to market forces interplay in the petroleum downstream sector which was hitherto absorbed by the Federal Government of Nigeria.
This has further slew economic activities and interactions across board, resulting to hardship and unimaginable high cost of living.
In arresting this ugly trend, government must urgently get some right policies on motion.
The *Keynesian economics theory*
(expansionary economic policies) must be urgently activated to avoid a looming crises.
:- Government must make deliberate effort in *increasing expenditure* in infrastructural development such as highway road construction, bridges construction, seaport construction, gully erosion and flood control construction etc, through which more money and employment can be created to enhance the purchasing powers of citizens.
:- Tax policy. There is urgent need for rebate in tax rate (PITA, VAT) so as to increase the disposable income of salary earners and induce reduction of prices of goods and services to stimulate the market forces with more resources for affordable goods and services.
:- Reduction of import duties on mass transit buses and articulated vehicles, this will helps in injecting more buses and trucks into the transportation and haulage system thereby creating competition of high supply against the demand for means of moving people, goods and services across the country, while import duties on luxury vehicles and cars is increased to stem the inflow of importation and outflow of foreign exchange in relation to such products.
:- Encourage export. There must be sincere effort to open the frontier of exportation of goods that are locally produced in Nigeria to generate foreign exchange, this will help in reducing the possibility of pressure on our forex market and stabilize the value of Naira.
:- Economic Stimulus packages/ Social welfare package/ Monetary policy interaction.
1. Interest free credit facilities and subsidized farm inputs for farmers to enhance massive production of food.
2. A *low single digit* interest rate credit packages for SMSEs in selected sectors.
3. *Residential Houses Energy Consumption Subsidy Package* ( RHECSP):- this package should be for rural areas and selected areas in the urban centers and cities across the country, tenants senior citizens and unemployed graduates must be given priorities in this package. These areas must be low and medium income earners residential areas, such as, Mushin, Ajegunle, Okhoror, New Benin, Sabo Garri, Upper Iweka, Upper Sakpoba, Enerhe, not Maitama, Asokoro, Victoria Island, Ikoyi Agodo GRA, Lekki etc.
These will helps to;
a. Cushing the immediate effect of fuel subsidy removal and avoid economic crises.
b. Stabilize prices of goods and services.
c. Create employment and kickstart the economy on the road to progress.
d. create wealth and economy stability in lieu of the removal of fuel subsidy in Nigeria.
e. Guarantee national security and peaceful coexistence.
The Executive who are charged with the responsibility of initiating these policies, the National Assembly who has the power of approval and over-sighting as well as the Nigeria economic council with the powers to direct must urgently work in synergy to arrest this ugly are avoidable hardship and economic crises in view.