The World Bank has urged Nigeria to increase its sources of income by cutting subsidies for petroleum products and increasing taxes on Nigeria . to increase “sinful goods” such as cigarettes, alcohol and sugary drinks.
“These reforms include improving tax administration, particularly for VAT, while also making some major policy reforms, such as implementation of a tax on electronic money transfers and additional excise taxes on alcohol and tobacco, “it says.
” While these reform efforts are expected to generate additional revenues of over 3 trillion yen (7.2 billion US Dollars) per year it could be difficult to implement them politically in the run-up to the national elections planned for 2023. “
In its Nigeria Development Update of 22. The World Bank said that Rising inflation in the country has led eight million Nigerians into deep poverty in less than two years.
According to the report, Nigeria no longer benefits from an Ans crude oil prices rose. As a result, the country has low revenues despite striving to maintain high and unsustainable gasoline subsidies.
Nigeria, according to the update, is the only country in the world to “approve” universal pricing- Gasoline Subsidies “and, as such, has the worst revenue-to-GDP ratio among 115 countries.
The bank argued that the poorest Nigerians do not benefit much from the subsidy scheme.
“Nigeria is the only country in the world with a universal price subsidy that applies exclusively to PMS. General price subsidies for liquid fuels are almost always regressive because the rich use far more fuel than the poor, ”the report says.
“ PMS subsidies are particularly regressive because of PMS It is mainly used in light and medium-duty vehicles that rarely belong to the poor. “
Since an increase in PMS prices tends to have minimal negative effects on poor households, governments around the world in the Priorities are generally set Abolition of PMS subsidies over those that apply to other fuels.
“However, Nigeria has done the opposite and abolished all subsidies for liquid fuels except PMS. In addition, the Nigerian PMS subsidy is exceptionally generous, and in October 2021, the PMS pump price was the seventh lowest among 168 economies studied at just 495 yen (US $ 4.40 per liter). “