Monrovia – The Liberia Revenue Authority (LRA) has three days, by directive of President George Manneh Weah, to ensure that tariffs on basic commodities are reduced.
Report by Lennart Dodoo, [email protected]
This, according to President Weah, would alleviate hardship in the country, which is being caused by high tariffs resulting to high prices of goods and services.
“The President has observed that the current tariffs regime including the ECOWAS Common External Tariff (CET) is causing a serious hike in the cost of basic commodities in the country, thus adversely affecting the Liberian people, especially the poor. The President deems this as unacceptable and further expressed that it contravenes the premise of the pro-poor agenda,” noted a statement from the office the presidential press secretary.
The CET was introduced to the Legislature in 2017 by former President Ellen Johnson Sirleaf and called for its adoption.
The introduction of the CET enabled Liberia to join other ECOWAS countries in establishing a common customs union, making trade and commerce easier within the ECOWAS sub-region.
According to ECOWAS, in any situation where a group of countries decides to form a customs union as part of the goal to achieve economic integration, they must establish a common external tariff which would set the same customs duties, import quotas, preferences or other non- tariff barriers to trade applicable to all goods entering the territory of the group, regardless of which country within the group they are entering. It was for this purpose that the 15 Member States of the Economic Community of the West African States on 25th October, 2013 adopted the ECOWAS Common External Tariff (CET).
The benefits of the CET include,
- Intra-regional trade would be increased: more goods would be available to be traded regionally.
- The CET would guarantee predictability and stability in trade: importers would be able to make long terms plans with the confidence that the tariff would remain the same. Policies affecting import tariffs can no longer be changed arbitrarily.
- As a result of the predictability and stability in trade, more foreign direct investments would be attracted.
- Increased turnover resulting from an enlarged domestic market: the whole region would become a single market for imported products.
- Increase in economies of scale resulting in the enlargement of domestic industries.
- Increased production and productivity: with an expanded market to satisfy, production and productivity would increase.
- Discourage smuggling: to certain extent, smuggling is encouraged by the disparity in tariffs. The application of common tariffs across the region would remove the incentive to smuggle products into countries that previously had high tariffs for those products.
However, analyst say while the President’s move may be embraced by the masses, there is the need for careful consideration before pulling out of the CET regime, baring at the back of the mind that it is a regional tax regime.
Also, as the FY2018/19 draft national budget is already before the legislature, reduction of tariffs would adversely impact the revenue envelope, thereby, another major budget shortfall should be anticipated.
But President Weah is not willing to leave any stone unturned in his quest to ensure that government policies and regulation align with his pro-poor agenda.
“The President asserts that he will leave no stone unturned in making sure that basic goods are made affordable and that the public is not strangulated by unreasonable high tariffs.
The current tariff regime which was implemented during the final days of the past administration has increased tariffs, in some cases to as high as 40 percent,” the Press Secretary statement noted.