By Abdu Rafiu
Prices of practically all goods are rising in a wave, driven by the all-powerful US Dollar and public response to the planned re-design of Naira notes by the Central Bank. Those who have a mountain-load of Naira notes are running all over the place to buy up the Dollar from the parallel market so that the Naira notes, mostly of doubtful sources, and which they cannot rush to the bank, do not become worthless in their hands. Ask any dealer in the black market; he would give you a picture of how every Dollar is being bought up. According to an internet report, a dealer took delivery of $3million yesterday morning, within a twinkle of the eye, all of it had been hungrily bought. That is the international legal tender that is reckoned cannot run out of season. As of Monday, according to The Cable online publication, one needed to arm oneself with N815 to buy $1 (one US Dollar). Daily Trust said in some places, it was N818 to the Dollar. Whoever wants pound sterling, must arm himself with N900 and Euro was N790 as of Monday. Officially the Dollar sells for N435. BusinessDay says the exchange rate was heading towards N1, 000 as scarcity worsens, a dramatic plunge from what some put at N219 to the dollar in 2015.
Three people I follow keenly on matters of economy in the present time are Bismarck Rewane, Dr, Sam Amadi and Dr. Muda Yusuf, the erstwhile director-general of Lagos Chambers of Commerce and Industry, who is now succeeded by Dr. Chinyere Almona. They have replaced Chief Ernest Sonekan and Prof. Sam Aluko who on matters of this nature were always two parallel lines. Rewane is stepping into the optimism shoes of Sonekan. Sam Amadi and Muda Yusuf may be critical, but are yet to step fully into the shoes of Sam Aluko. An unrepentant optimist, Chief Sonekan would always say there was no cause for alarm. The Governor of Central Bank, Godwin Emefiele, is assuring the nation there is no cause for alarm.
In our plans and programmes, one critical area attention is least paid is man, who can be an agent of development, and, if he chooses, and that is what he often does, be an agent of destruction. It is neglect of the much-needed understanding of who man is that has accounted for the failure in practically all facets of human activities, and it will be the ruin, not only of Nigeria , but a majority of the countries of the world.
(This subject will be fully discussed next week).
The fall of Liz Truss
For the ringside observers, the fall of Mary Elizabeth Truss was dramatic and too soon. For financial experts and economic gurus, it was seen coming and with speed. It all had to do with her tax reforms. What had hitherto prevailed was to tax corporations and companies heavily. The generality of people would clap for that everywhere. Taking from the rich for the poor or the society as a whole is considered normal and the argument for it unassailable. What the wealthy have is usually regarded as common patrimony from which a handful out of smartness cornered a huge chunk. But to finance public bills, there are other forms of taxes. VAT is one of them. Whether one is endowed materially or one is in the middle class or is poor, VAT does not discriminate: VAT is VAT.
So, with her reforms the general public were likely to be affected. They would pay more in Value Added Tax, Resentment immediately set in, and the Tory Party, of which Liz Truss was leader, was alarmed and it panicked. The party was going to be the loser in the end with general elections beckoning in not too far away horizon. The Opposition, seeing itself as the ultimate beneficiary of what was considered serious blunders by the Conservative Party, orchestrated resentment across the land, posing as a better alternative. It was already rehearsing and warming up for the possibility of gaining control of the portals of No.10 Downing Street before the general elections that are about two years away. The Leader of Opposition, Sir Keir Starmer, became more visible, pressing for general elections without any further ado.
Three most senior functionaries of the government became victims–the Chancellor of the Exchequer, Kwasi Kwarteng, the Home Secretary, Suella Braverman who used her personal email for official matters–she was in charge of immigration, police affairs and security–and Liz Truss, the Prime Minister herself. Thus ended prematurely the tenure of Mary Elizabeth Truss more referred to as Liz Truss for short as the 56th Prime Minister of the United Kingdom. Her administration of only 45 days was the shortest in British history. Now, it is time for deep reflections on what actually went wrong for the otherwise history-making Prime Minister of the United Kingdom.
During the Summer 2022 campaign for the most coveted office of the UK Prime Ministership, Liz Truss described herself and her policies as ‘disruptive’; she was going to challenge the ‘old’ order and ‘institutional group think’ whom she believed had held the United Kingdom’s economy back.
She had in mind reforming the tax system, and got fixated on tax cuts. Her targets were The Treasury, the Bank of England and the Office for Budget Responsibility. Britain runs and is sustained on the 21 forms of taxation that individuals as well as corporations pay to the government. The financial year end of March 2022 revealed that just three main taxes, namely Income Tax, National Insurance Contribution and Value Added Tax raised over £530 billion (Pound Sterling) to the British government treasury. So if a Tax reform was due, it needed to be well thought out, carefully planned and executed slowly.
When she spoke, her policy was well received and it was thought of her that she certainly meant well to reduce the tax burdens on individuals and corporations. She also had to grapple with energy crisis triggered, indeed, exacerbated by the Russian-Ukraine war. Much as the policies were well received, they required being well thought through, carefully planned and executed in steps as the Natural Law of Gradualism does not permit of jumps and gaps. As things turned out, it became obvious that she had very little time to fine tune her tax reforms before they were presented in the Autumn Mini-Budget statement of 23 September.
The Mini-Budget was thought generous to the people but gravely harmful for the markets. Liz Truss boldly cancelled increases to National Insurance and Corporation Tax, she cut Income Tax and removed restrictions to contract workers Tax. These caused vicious spikes in the market until The Bank of England was forced to step in.
The Bank of England raised interest rates by 0.5 percentage points to 2.25 making it the highest level in 14 years all in an attempt to make up for the shortfall in revenue from taxes, the most prominent source of income to the UK government. Revenue inflow was reduced without a credible plan for additional income. This created grave economic turmoil of the year as the base mortgage rates jumped to unaffordable rates for homeworkers.
The narrative for Liz Truss soon became desperate; although her intention to give families tax cut was right, the execution went disastrously awry and that was the final straw for her. Finding herself at a crossroads, Liz Truss reversed the tax policies. After the Finance Minister Kwarteng resigned, his successor Jeremy Hunt removed the cap on energy prices meant to last two years in the wake of the Russian retaliatory moves against the West that depended on her supplies. Mr. Hunt simply put the cap to last only six months. The reversed policies included tax cuts for the wealthy and corporations. The wealthy and companies were as usual to groan under a heavy tax burden, which is not what conservative parties stand for in all free world. Free enterprise is their dictum and they protect it. Also affected was the tax waiver for overseas shoppers. Liz Truss policy was that tourists and overseas shoppers would make purchases free as a way of boosting sales and by extension promote production, reckoning that with higher sales, the more money there would be to buy more goods. Members of Fuel Poverty Action took to the streets in protest march pressing for affordable energy for Britons. Their posters read: “Energy for all”; “Tax the super rich.” Liz Truss lost the trust of both the corporate world and her compatriots in general. The corporate world looks up to a Conservative Party to create and maintain a conducive environment for industries and businesses to flourish. They regard it as their party established to protect manufacturing and business interests. There was uproar even from members of her own party in and out of Parliament; so she had to go.
In practically all countries, people do not see anything wrong in levying special and heavy taxes on the wealthy. Profit invariably is regarded as loot. So, it must be taken from the corporations to compensate the generality of the people. This is borne out of ignorance of the principles and mechanisms that govern life as revealed in higher knowledge of truth of life and existence made available to mankind in these times. Ignorance is proven in not knowing that what is on offer is equal opportunities for all but not equality of all human beings. The table of the Lord is well laden for all, but each takes according to his own cultivated inner radiance which manifests in the inner capacity and capability to recognise opportunities, and in the unfolding of his talents and abilities. In other word, each one of us approaches the table of the Lord according to his ability. It stands to reason, therefore, that the first duty of everyone, is to avail oneself of the knowledge that is the shining light and staff; otherwise he would be groping in the darkness and grumbling. What had been sown in the past will determine the harvest of today according to the Law of Sowing and Reaping better captured in the proper terminology for it, the Law of Reciprocal Action. What is sown today will ripen and be ready for harvesting in the future, here or hereafter, or in repeated earth-life called reincarnation. Unswerving and self-enforcing is the Law
Governments believe it is helping the less endowed by taking from the rich to compensate for the shortfall of the less endowed or to take struggle away from the citizens or from any section of the society. Life is a struggle which leads to the unfolding of abilities and talents. Where there is no goal and attendant struggle to meet it, the gifts of the Creator each person carries within him are paralysed. In the words of Daniel Swarovski, in his priceless work, The Time is Ripe: “A good government is not one that insists on attending to everything while adopting a paternalistic attitude towards its citizens regarding them only as passive tools.” He went on: “The tendency of physical and mental laziness is contrary to the necessities of life on earth which require movement, for without work, without industry, we cannot master life…The over protective system is a great burden to the economy and the working population and companies which have to pay heavy taxes.”
Liz Truss believed that if the burdens on companies are reduced by way of reduced tax, there would be more capital for expansion of activities and development, which would translate into more jobs and all-rounded economic flourish for all citizens. But her minister was wrong in hastily removing the cushion on energy prices since the rise was externally induced and the unforeseen and sudden consequences were beyond the average citizen to handle.
A list of the 21 taxes individuals and corporations in the UK pay goes as follows:
Income Tax
Capital Gains Tax
National Insurance
VAT
Corporation Tax
Bank payroll Tax
Petroleum Revenue Tax
Fuel Duties
Inheritance Tax
Stamp Duty
Tobacco Duties
Spirits Duties
Beer Duties
Wines Duties
Cider Duties
Betting & Gaming Duties
Air Passenger Duty
Insurance Premium Tax
Landfill Tax
Climate Change Levy
Aggregates Tax.
As far as Liz Truss was concerned, these were too burdensome to the British citizens. How Rishi Sunak, the new Prime Minister, is going to handle the economic crisis remains to be seen.
It must be said that mankind are living in new times, a feature of which, to our shock and chagrin, man will witness in the rise and fall of governments.
The Guardian
