“Revenue mobilization, a compelling public policy option for Liberia” – Samora Wolokolie
Monrovia – Making a case for Liberia at the seventh African Fiscal Forum in Nairobi, Kenya, Deputy Minister for Fiscal Affairs Ministry of Finance & Development Planning Samora P.Z.
The Fiscal Minister was in Kenya on an invitation from the International Monetary Fund and the government of Kenya.
Minister Wolokolie averred that domestic resource mobilization is an essential component of sustainable, economic development.
Minister Wolokolie noted it is a process that reinforces the theory that governance is inherent in the people, and those people have an obligation to formulate laws and policies that would improve their well-being.
“Just as government exercises sovereign control in other areas, it is a laudable undertaking for government to formulate policies, and design strategies to generate revenue from within its territorial confines,” Minister Wolokolie said.
Minister Wolokolie said when the government and its people take cease of generating revenue from within adding that they take ownership.
“They enjoy the flexibility of using the said revenue in line with national development plans without the strings of donor restrictions,” Minister Wolokolie said.
Minister Wolokolie furthered that Domestic resource generation can be an effective vehicle to solicit donor support adding that it shows that government is taking proactive steps to raise revenue and not just sitting complacently with an out-stretched hand to the donor community.
The Fiscal Minister said, when the government shows genuine commitment to effective tax administration where loopholes are closed, where tax avoidance and tax invasion are discouraged and penalized, we set the basis for the generation of more revenue.
Minister Wolokolie emphasized that domestic resource mobilization cannot be successful if resources that are generated are squandered through irresponsible and wasteful spending.
“The success of domestic resource mobilization would be imperil if meager resources that are generated are squandered through irresponsible and wasteful spending,” Minister Wolokolie said.
Minister Wolokolie furthered: “For the public to have confidence to pay their fair share, they must be certain that their tax dollars are used for the achievement of social and economic development.”
Minister Wolokolie said, donor fatigue is not a cliché anymore adding it is a demonstrated fact.
“No one is even prepared to continuously and perpetually shoulder the responsibilities of others. It is therefore imperative that we are cognizant of this reality and take on the task of looking within and strategizing on how we can support our spending habits using domestically generated revenue,” Minister Wolokolie said.
“The world is changing. Countries with the biggest “wallets” are reassessing their support to third world countries,” Minister Wolokolie added.
The Fiscal Minister said, there are competing priorities relative to the traditional support groups ( IMF, World Bank, etc.), and the domestic politics of donor countries is also bringing the idea of direct budgetary support into greater focus and scrutiny.
Minister Wolokolie said, closing loopholes of Revenue Losses – Reducing tax holidays from concession agreements, executive orders and tax exemptions.
He added, that tax expenditures include deductions, reduced tax rates, exemptions, preferential tax rates, and in some instances, preclusion from tax liability.
Minister Wolokolie said, the objective is to encourage foreign direct investments and to promote investments in agricultural, housing, manufacturing and other “under invested” industries.
The Fiscal Minister said Tax expenditures are also intended to easy off pressure on investors during the inception phase of their business.
“Tax expenditures, especially short term incentives are used in Liberia to attract investment in the manufacturing industry. In all cases, an economic impact assessment is carried out,” Minister Wolokolie said.
“Because “hard” revenue is foregone in the issuance of tax waivers, it is imperative that tax expenditures should be limited in scope and size.”
Minister Wolokolie said over the years tax expenditures have escaped public scrutiny to the amusement of the beneficiaries.
“With renewed focus on Domestic Resource Mobilization, Tax Expenditures have come under scrutiny.”
Minister Wolokolie said tax breaks usually reward people doing what they would do anyway, however, some tax expenditures may be necessary to help start-up operations.
“A reckless and loose Tax Expenditure regime is antithetical to the aims and aspirations of Domestic Resource Mobilization, and a major impediment to increased revenue generation,” Minister Wolokolie added.
Wolokolie said for Domestic Resource Mobilization Strategy to achieve its intended objectives, there must be a convergence of a well thought-out road map/Clear strategy, Unwavering Political will, Targeted and measurable objectives, A responsible Tax Expenditure framework that is limited, monitored and economically necessary and Clearly laid out tax policy and effective and efficient tax administration, among others.