THE LIBERIA REVENUE AUTHORITY last week announced whopping new goods and service tax rates that is already swirling in controversy.
THE LRA IN A statement declared: “Pursuant to the Liberia Tax Amendments Act of 2016, amending the Liberia Revenue Code, this is to inform all businesses and individuals that effective November 1, 2016, Goods and Services transactions which rate is presently at 7% shall be increased to 10%.”
THE LRA WENT ON TO encourage all businesses, taxpayers and individuals to comply with the provision and pay their lawful taxes to enhance delivery of basic social services for the public.
WHILE WE AGREE that the taxes are a major component of a nation’s economic drive, the manner and form the Ellen Johnson-Sirleaf-led government is proceeding regarding taxation on the poor and struggling business defies convention and the norms of a country emerging from war and in the process of completing its transition from war to peace and restoring its economic sanity.
THE NEW MEASURES are part of what Finance and Development Planning Minister Boima Kamara outlined as an initiative to generate some $1.3 billion to revive an economy that was ravaged by a slump in its key export commodities and the Ebola epidemic.
THE NEW MEASURES also come in the aftermath of the signing into law of the National Budget for the 2016/2017 fiscal year, by President Sirleaf, which runs from July 1, 2016 to June 30, 2017 is US$600 million.
IT IS PROJECTED that of the total amount, US$524.9 million would be raised from taxes and non-taxes revenue; US$50.2 million in grants from external resources while unspent revenue from the FY2015/16 comprising US$2.0 million would be rolled over to the current fiscal year. The National Budget is apportioned between Recurrent Expenditure in the amount of US$520.5 million or 86.7% and the Public Sector Investment Projects (PSIP) with US$79.7 million or 13.3%, meaning the Government is spending a meagre small amount on activities that will build the long term productive capacity of Liberia.
WHILE THE GOVERNMENT is hoping to transform its economic fortunes through spending cuts it hopes will assist in funding planned investments, even after it reduced the budget by 3.5 percent to $600 million for the 2016-17 financial year, the end results is bound to cause serious repercussions for those languishing at the bottom of the economic ladder.
LAST WEEK, FrontPageAfrica, citing sources revealed that members of the legislature had been rushed back to session in a bid to speedily reconsider the amendment of the Revenue Code. Accordingly, a sources told FPA, upon reconvening session, lawmakers would consider instilling 10 percent of the taxable amount on alcoholic products and additional 5 percent surtax to telecommunications services. This means, GSM companies and cellphone users would be taxed 1 cent per minute.
THESE MEASURES, which have now come to light; according to the LRA, aims to help the government which is in dire need of money, raise some funds to support the FY2016/2017 Budget.
IN SIMPLE AND CLEAR ENGLISH: Although the budget has been signed, sealed and delivered, the country is virtually bankrupt.
COMPLICATING MATTERS, consumers are still grappling with the introduction of new banknotes, US dollars have become scarce and Liberians are feeling the pinch as many are now suffering under twin effect of high unemployment and high inflation.
THIS BRINGS US back to our concern that the government’s decision to enforce taxes on already struggling businesses and Liberians is bad for Liberia.
ENFORCING excise tax at a rate of 45 percent on the bread and butter items like cellular calls; beverages with alcohol content in excess of one percent, will likely put a dent in consumers’ pockets.
THIS IS CLEARLY regressive taxation.
MORE IMPORTANTLY, those elected to serve have inflicted more wounds on those who elected them with a targeted decision to reduce salaries of civil servants, while maintaining high salaries for legislators and political appointees.
AS CONCERNS CONTINUE to grow that the government will not be able to function properly with the current state of the economy, we feel strongly that the Sirleaf-led government is twisting priorities here.
PRESIDENT SIRLEAF, in this crucial hour must go beyond words and ensure that her administration accompanies its rigid taxation with similar measures on officials who continue to fly first and business classes and live in luxurious hotels or seminars and workshops that bring very limited benefits to Liberia.
THE GOVERNMENT has failed in its effort to curb down on officials who continue to surf the internet for every workshop, seminar and international program for an opportunity to collect per diems and travel benefits.
WE FEAR THAT if Madam Sirleaf fails to do this but instead, continues to oversea an administration that is setting itself up for a legacy of taxing the poor to satisfy the rich, we may find ourselves staring down the barrel of the memories of yesterday, a sad reminder of an ugly chapter that led an unsatisfied bunch of low-ranked army officers to stage a coup that ended decades of Americo-Liberian rule.
NO ONE WANTS war in Liberia and no one wants to disturb the looming completion of a democratic transition from one elected government to the next – or a transition from war to peace.
IN THE SAME VEIN, no Liberian is looking forward to a tax regime that is bound to cause problems down the line, for businesses, for citizens and those languishing at the bottomless pit of poverty and economic stagnation.
WE ASK the Sirleaf-led administration, whether the administration has failed to maximize non-tax revenue like similarly situated resource rich countries like Botswana where upward of 90 percent of government budget is from non-tax and custom revenue.
THESE ACTIONS are not only bad, but simply a wrong approach to salvaging an ailing economy.