Most economists agree that the Nigerian economy is in the midst of turmoil caused by a crash in the global price of oil. The only question is, how bad will the situation get? The overwhelming majority of Nigerian government revenue derives from oil exports. As oil prices have fallen from $115 a barrel to hover around $50 a barrel over the last nine months, economic indicators in Nigeria have entered a downward spiral. At one point just before the elections, the Nigerian naira fell to record lows of around 206 to 1 dollar. With global capital markets currently reeling from the Greek default crisis in the Eurozone, oil commodity prices will continue to fall and sovereign borrowing costs will continue to rise rapidly, especially for governments with low-credit worthiness. It is now the responsibility of the new APC-led administration to arrest the current economic slide. The only way to do that is to increase government revenue, immediately. Throughout the campaign president Buhari, his running mate and other APC associates suggested that they would increase revenue by eliminating mismanagement and political corruption – in the petroleum sector and the Nigerian National Petroleum Corporation (NNPC).

Nigeria has suffered from gross mismanagement and theft of public funds, particularly in the petroleum industry. The recently released audit report on the NNPC identified a host of opaque and unprofessional practices, including oil swaps (paying for refined oil with unverifiable amounts of crude oil), that need to be rectified immediately. However, as long as oil prices remain around $60 per barrel, it is doubtful that even after curtailing mismanagement and corruption, there will be enough revenue to service debts, fund social development programmes, maintain a reasonable exchange rate for the naira and bailout bankrupted states.

President Buhari still enjoys popular support and will continue to for his first hundred days in office. He presently has a tremendous amount of political capital to spend on his political objectives. As time goes, political opponents will begin to regain their footing, as we just saw in the national assembly, and executing acute policy shifts will become more difficult. It is very important during these early days that President Buhari and the APC choose their battles carefully. It would be a catastrophic mistake for Prresident Buhari and the APC to spend their honeymoon period primarily waging anti-corruption battles with the NNPC and other entrenched interests for two reasons. First, the wellspring of political support to tackle corruption in Nigeria will never run dry. Nigerians are sick and tired of the graft and mismanagement that has plagued the country for over half a century and it would be a total waste for Buhari to squander his honeymoon period on an issue that he could tackle at any other point in time with little or no public resistance. Second, it is doubtful that the protracted anti-corruption battles with NNPC will plug enough holes to raise enough revenue to stabilize the naira and avert a severe economic slowdown.

During the campaign, the APC took a page from Soludo and pointed to the period a decade ago when Nigeria received debt relief and thus was able to increase its savings even with the comparatively low oil prices at the time. The inference they try to make is that they can continue to rely primarily on oil to fund all their initiatives and run the states no matter how low the price falls. The problem with this logic is that the economic landscape in Nigeria is totally different today. Nigeria is not receiving debt relief anymore, but actually faces a rising debt profile that is now primarily from domestic sources. Furthermore, even if President Buhari were to solve the corruption problem overnight, as long as global oil prices remain depressed, as an oil-reliant state, Nigeria will face difficult economic times.

Over the last decade, Nigeria’s elite have grown fabulously wealthy. With a record number of billionaires and millionaires, the country has become a top destination for private jets, luxury cars, champagne and a host of other extravagances enjoyed by a global elite. Nigeria’s elite enjoy a 3 percent tax rate, one of the lowest on the planet. In contrast, in other economically successful countries the elite pay on average 13 percent or more of their earnings and assets in taxes. Nigeria can no longer afford to allow its elite to get away with not paying what they owe to the society that has made them wealthy. President Buhari can fix Nigeria’s revenue problem almost overnight by enacting redistributive taxes on the elite. Doing so will help prevent further devaluation of the Naira, and more importantly prevent inflicting austerity on Nigeria’s masses.

If President Buhari is truly interested in increasing revenue, there are a series of taxation measures that he can implement for the wealthiest 3 to 5 percent of Nigerians that will dramatically increase government revenue:

1. Mansion Taxes: homes that are valued in the top 5 percent in the country should be taxed on a sliding scale up to 20 percent. Tenants of leased properties should pay 80 percent of these taxes. Owners of multiple houses, in country and abroad, should pay higher tax rates on their properties.
2. Luxury Vehicle Taxes: personal vehicles valued over a certain threshold should be taxed (this includes firms that purchase luxury vehicles for employees). Households with more than one vehicle should pay an added tax on any additional vehicles. There should also be taxes on owners of yachts, and other aquatic vehicles, as well as private aircraft.
3. Increased tax rate on incomes over 10 million naira.
4. Increased capital gains taxes on shareholders of companies, including SMEs with earnings above a certain threshold that employ more people than just the registered owner.
5. Government Contractor Taxes: an additional tax on the profits or earnings of any company or individual that has done business with the government in the previous three years.
6. Inheritance Taxes on estates valued over 10 million naira.
7. Luxury taxes on imported luxury consumer goods such as alcoholic beverages, cigarettes, foreign brand foods, luxury textiles, satellite broadcasts, foreign film screenings and business class or first class travel tickets.

With any policy, enforcement is key. As it stands, compliance with Nigeria’s existing taxation measures is very limited. Keeping track of 170 million citizens’ assets is clearly a complicated logistical endeavor, but enforcing these luxury taxes on the proclivities of Nigeria’s top 3 percent should target around 5 million individuals and several thousand companies. This will make the task much more manageable.

Nigerians should understand that despite ongoing turbulence in the rest of the world, Nigeria can avoid an economic crisis. Further devaluation of the naira is not necessary, and austerity measures that reduce funding to social services are also unnecessary. If any of these things occur in Nigeria, it will be in part because President Buhari failed to use his post-election honeymoon period to address Nigeria’s core fiscal problem of dependence on oil for government revenue. The ongoing Eurozone crisis means there will likely be very little global assistance for Nigeria if the country’s economic situation worsens. President Buhari needs to act quickly and decisively to implement policies that raise revenue or face a possible collapse of the Nigerian economy before year’s end.