The federal government has cut down the rate of cash flow in the country owing to the drop in oil price, which it says poses great threat to the Nigerian economy. It states that taxes shall be imposed on luxury goods and flamboyant live-style ,such as Jets, Champagne, as well as others, to ensure that this reduction in oil price does not impose a permanent decline in the economy.
While addressing newsmen in Abuja yesterday the 16th of November, 2014, the Minister of Finance and Coordinating Minister of the Economy, Dr Ngozi Okonjo Iweala, stated that to cushion the impending downfall in the economy owing to Oil price falls in the International market, government shall henceforth impose a tax duty on goods that are quite luxurious, as this will enhance balance and also draw more revenues from the non-oil sector for the growth of Nigerian economy.
"We all know the definition of luxury goods, we are still compiling the lists and one of the things we can tax is champagne, alcoholic beverages, jets, luxury cars- we will look at the engine capacity, and yachts. We are putting the list together but we intend to do a surcharge going forward on these items. The principle is that those who are better off in the society and I hope they won’t mind will be willing to share a bit more in remitting a little bit more to the treasury than what they normally do on these things.” she said
She also made known another measure put in place to stem the tide in the fall of oil price;
“We are not talking about (cutting) salaries and benefits. We are talking of trainings and travels and these will be only for critical and essential items which will be pre-approved by the Head of Service and the Director-General of the Budget Office and then if someone invites you for overseas course, you can go provided they pay for your training and your stay and you have to furnish evidence that they are paying before you will be allowed. The purpose of this is to tell you what we are doing and this team is calm and will be effective and we are working with the monetary policy authorities and together we will manage the economy in a transparent manner so that people need not have any fear.” she said.
“As part of the response, the Medium Term Expenditure Framework and the Budget 2015 proposal to the National Assembly have been revised. Government is now proposing a benchmark of $73 dollars per barrel to the National Assembly compared to the earlier proposed benchmark of $78. Given the nature of the oil market, we needed to see the extent and trend of the oil price in order to take the right measures. Panic is not a strategy. It’s important that our strategies are based on facts and a clear understanding of both the strengths of the economy and the challenges posed by the drop in oil prices which is currently at $79 for our premium Bonny Light Crude. The drop in oil prices is a serious challenge which we must confront as a country. We must be prepared to make sacrifices where necessary".
The Minister, stating further on the new Naira notes that is proposed to be minted by Central Bank to cut down the effect of oil price fall in the economy, she said;
Printing money without adequate revenue support will lead to serious consequences for the country. It will spur inflation as the experiences of Germany in the early part of the last century and more recently, Argentina and Zimbabwe demonstrate. This prescription will victimise the poor and the middle class that it is supposedly protecting.”
“To show how serious government is about job creation, President Jonathan will tomorrow, (Monday) November 17 launch the 4th edition of YouWin to support another 1,500 entrepreneurs along with a private equity fund for entrepreneurs. That is an expression of government’s commitment and seriousness to job creation.”
Finally she concludes with giving more insights to the Excess Crude Account and how it will be managed by the FG until the nest year to stabilize the state of the economy.
“We will work in such a way that we won’t deplete the ECA because we have to leave something for next year but we might go to tap about a half of it ($2bn) or slightly less than half to be able to meet expenditures that are crystallizing at the moment that we need to make.” she said
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