The very word "subsidy" is where the fraud starts .
Subsidy is defined as funds appropriated to keep a cost low or selling price competitive
PMS price in Nigeria is neither low or price competitive but the FG passing its inability to manage refineries as a tax to ALL Nigerians
If the 4 refinaries worked, but PMS refined still retailed at say N500 a litre, a subsidy will apply say N300, making retail prices N200.
However, this is not what's happening in Nigeria
Subsidy has allowed the non repair of refinaries so that $ revenues can be missappriopted
Thus its not a subsidy but a tax.
Its the Federstion Inefficiency Tax FIT
The worst part? ALL Nigerians pay for FIT irrespective of if they use PMS.
Prior to "subsidy" NNPC $ remittances pay for health and education in Federation budget, today it does not
This means ALL Nigerian including rural dwellers without cars or generators pay the FIT to ensure the uses or PMS get "cheap" imported PMS
Thus low car States like Yobe, are subsidizing high car States like Lagos
That's why its a Federation inefficiency Tax FIT
Removing subsidy is a tax cut to low PMS using States like Yobe because FAAC remittances to Yobe, Ekiti and Ebonyi will GO UP,
The "subsidy" is now unaffordable, its more than health and education combined. Crazy!!!
Should subsisy be scrapped?
Yes but gradually. I would like to see the subsidy first transits from "Ports" to "Pumps" see article at end.
Then this "Pump" strategy can be extended to "poor" households and commercial vehicles, especially gas-powered buses
Summary,
You can't pay a subsidy if you are broke.
Today, Nigeria is broke, caused of wasteful spending.
Could you fix it?
Kalu Aja
@FinPlanKaluAja1
CFEI. Member AFCPE. Making money, the economy and personal finance easy to understand. https://t.co/0wCFSkLwni Podcast. https://t.co/t9c3IFbLzz
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