Some Economists on Thursday advised the Federal Government to channel the subsidy funds hitherto been spent on subsidizing Premium Motor Spirit (PMS) to infrastructure and human capital development.
The economists gave the advice in separate interviews with the News Agency of Nigeria (NAN) in Lagos.
Mr Taiwo Oyedele, Fiscal Policy Partner and West Africa Tax Leader at PwC told NAN that full deregulation of the downstream sector was the right step for the country.
Oyedele agreed that it was time the government allows market forces to determine the pump price of petrol as in the case of diesel which had been deregulated for some years now.
He added that Nigerians would be better off should the savings from subsidy be channeled towards infrastructure and human capital development.
Oyedele stated that in the long run, the deregulation was expected to attract more investment to the sector, create jobs, facilitate diversification, and preserve scarce foreign exchange.
“It is certainly a difficult time for Nigerians but also the government, and I believe full deregulation is the right step forward.
“Deregulated fuel prices may be expensive but the subsidy is even more expensive and we cannot afford it as a country.
“At the same time, some people who take advantage of any slight increase in the price of fuel to hike the price of their goods and services should have a rethink.
“For instance, if public transporters only seek to recover the additional fuel cost rather than profit from it, then the impact on transport fare will be negligible,” he said.
On the effective distribution of the N2.3 trillion stimulus package of the Economic Sustainability Plan, Oyedele said government interventions should be more targeted and coordinated especially for Small and Medium Enterprises (SMEs).
According to him, being targeted required the use of data to identify those who are most in need of support and where the economy will get the highest value for every Naira spent given the limited resources.
Oyedele also pushed for alignment across all levels and agencies of government in the recognition of the key challenges and objectives to be achieved and the appropriate responses.
“To do otherwise is to pull in different directions which may not only fail to make the desired impact but could easily worsen the already difficult situation we find ourselves,” he said.
Speaking on ways to improve the standard of living for ordinary citizens, the tax expert appealed that business regulations be simplified and rationalized so as to not stifle legitimate businesses.
He added that multiplicity of taxes, levies, and charges are addressed to encourage Nigerians businesses and environmentally attractive investments.
“We have seen a decline in the Gross Domestic Product of the manufacturing and industrial sector due to the impact of the pandemic arising from capacity challenges, supply chain disruption, forex scarcity, and lower consumer purchasing power.
“There should be no introduction of new taxes, no increase in existing tax rates, and no additional tax compliance burden on people and businesses.
“To expand the tax base and widen the tax net, we do not need new taxes but new taxpayers who have the ability to pay but have either not been paying or paying incorrectly.
“This includes many businesses, high net worth individuals, and even government-owned enterprises who are often the worst tax defaulters.
“The country also needs to leverage technology, which is now being widely adopted, to collect data to bring more taxpayers to the net and ensure accurate and timely compliance.
“Government also needs to earn taxpayers’ trust by being transparent regarding revenue generated while being prudent with the allocation and utilization,” he said.
Also, Dr Benjamin Omoniyi, Development Economist, Department of Economics, Joseph Ayo Babalola University stressed the importance of human capital development in the growth and development of the Nigerian economy.
According to Omoniyi, economic activities and national progress were dependent on the quantity and quality of human capital in the society.
Omoniyi detailed that human capital development involved educational development and provision of sound healthcare programs that would subsequently lead to increased productivity and usher in improved economic progress.
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He said that an investment in education would lead to higher returns or an increase in national income than any other socio-economic infrastructure overheads such as dams, roads, and other tangible capital goods.
“It is the only active factor because of the role it performs in ensuring that all other factors (capital and land) are actively organized and coordinated.
“It is, therefore, necessary to explore the importance of this factor, the necessity for its development, and how it may help to impact or bring about economic growth in any economy or society.
“Education and health are basic objectives of economic growth and development in the sense that they are basic ends in themselves.
“Education performs an essential role in satisfying and rewarding individuals in life while healthcare performs a central role in improving people’s welfare in the society.
“It is the impact of these two factors that build up labor for improved productivity which reveals itself as economic growth.
“The level of human capital development, therefore, relies on them for improved output and progress in the economy which revealed itself in the form of improved gross domestic product or national income,” he said.
Omoniyi recommended that the government introduced policies to break the vicious circle of poverty to empower families on education.
He also called for the provision of crucial incentives that may aid human capital development for enhanced economic growth for people with critical, specialized skills such as engineers, scientists, medical doctors among others.
“Government should also institute strategy that will curb excessive mobility or migration of employees who have critical skills in the country to avoid the problem of brain drain.
“Government can also encourage overseas scholarships to train employees in the acquisition of scarce skills critically required in Nigeria to avoid unnecessary stoppages to the continuous production process which may hinder output growth.
“People with critical skills should be motivated and encouraged through better salaries to enable them to get engaged in productive activities that may adequately lead to economic growth,” he said.