Raising tax may reduce purchasing power nigerian experts
A very relevant topic!
Yes, Nigerian experts have indeed argued that raising taxes can reduce purchasing power. Here are some reasons why:
- Increased cost of living: When taxes are raised, the cost of living increases, which can lead to a reduction in purchasing power. This is because the increased tax burden can lead to higher prices for goods and services, making it more difficult for individuals to afford the things they need.
- Reduced disposable income: When taxes are raised, the amount of disposable income (income left over after taxes) decreases. This means that individuals have less money to spend on goods and services, which can reduce their purchasing power.
- Inflationary pressures: Higher taxes can lead to inflationary pressures, as governments may print more money to finance their increased spending. This can lead to a decrease in the value of money, making it more difficult for individuals to afford goods and services.
- Reduced economic growth: Higher taxes can reduce economic growth by discouraging investment and entrepreneurship. When taxes are too high, individuals and businesses may be less likely to invest in new projects or expand their operations, which can lead to reduced economic activity and lower purchasing power.
- Increased poverty: Higher taxes can exacerbate poverty by reducing the purchasing power of low-income individuals. These individuals may already be struggling to make ends meet, and increased taxes can make it even more difficult for them to afford basic necessities.
Some Nigerian experts who have made similar arguments include:
- Prof. Pat Utomi, a renowned economist and professor at the Lagos Business School, who has argued that high taxes can lead to reduced economic growth and increased poverty.
- Dr. Yemi Kale, the former Director-General of the National Bureau of Statistics (NBS), who has warned that high taxes can lead to reduced purchasing power and increased poverty.
- Dr. Bismarck Rewane, a leading economist and CEO of Financial Derivatives Company Limited, who has argued that high taxes can lead to reduced economic growth and increased poverty.
It's worth noting that while raising taxes can have negative effects on purchasing power, it can also be an important tool for governments to raise revenue and fund public goods and services. Therefore, it's essential to strike a balance between raising taxes and ensuring that the tax burden is not too heavy on individuals and businesses.