By Alieu Amara Suwu
Budget Advocacy Network (BAN) and International Centre for Tax and Development (ICTD) consider taxation critical to achieving sustainable development, reducing inequality, and strengthening accountable governance. In view of the research that has explored the impact of taxation and tax reforms on citizens, equity, and provision, thus, with the aim to increase the impact and usefulness of the research and share with policymakers, civil societies, stakeholders and taxpayers, BAN and ICTD in collaboration with National Revenue Authority (NRA) and Minister of Finance, have co-hosted a two day conference named, Sierra Leone Tax for Development Conference.
The two days conference, which commenced on 7th December 2022, and hosted at the Radisson Blu (Mammy Yoko Hotel) at Aberdeen in Freetown, converged experts, specialists in taxation, ministries departments and agencies, taxpayers and media.
Foday Osman Swaray, Executive Director, Action Aid, described the conversation as a developmental one, and he believed it has a direct link to public service delivery. He said tax justice should be a central concern for everyone working for social justice. He believed as an organisation, genuinely progressive taxation that is a tax system that generates official public revenue, while ensuring that that revenue is fairly redistributed and focus on rebalancing economic and gender inequalities. He noted that Sierra Leone has set herself an ambitious agenda through not an end and not much empty midterm national development plan with a strong commitment to finance public service delivery, especially in education, hence, for that to be achieved, financing will not only be required for the creation of new revenue streams, including reform of an existing revenue system should mean equality into account. He advocated that, they wanted to see a system where those private companies doing business in Sierra Leone pay a fair share of their taxes, therefore, by so doing, he believed it will allow government to generate the needed revenue to invest more in public services like education, agricultural, etc.
Dr Samuel Jibao, Commissioner General, NRA, said domestic revenue mobilisation is critical to effectively running of an economy. Commissioner Jibao said since his appointment in 2018, the revenue Gross Domestic Product (GDP) was 12.3%, by the end of 2019, the revenue GDP increased to 14.8%, and after he tried to look at the dynamics how COVID was maneuvering, got in the business continuity plans, revenue GDP again significantly moved from 13.9% to 15.7%. Again, he said said in 2022 came another shock that actually hit them very hard on expected and now they are struggling to maintain the 15.7% though affecting the supply side of the economy, the demand side inflation, the exchange rate, all of these multiple factors, economic fundamentals, actually affecting revenue generation. This year in September, the Commissioner General revealed that they were expected to have collected about 5.4 trillion but missed about 301 billion as of September which he said is like almost 0.5% of GDP which was in terms of the variance was like 5.5. He said the approach he has been taking, which is not to say, they are not going to come to the informal sector for taxation, adding that research has shown that the informal sector also have some forms of informal taxes but it is a way of how they can formalise it is very important.
Dr Yakama Manty Jones, Director of Research and Delivery, Ministry of Finance, explained asserted that, the Covid-19 pandemic, the ongoing war in Ukraine, and the intensifying threats from climate change have have created uncertainty, disrupted supply chains and exacerbated shortages of essential commodities, causing sharp increases in the prices of food, fuel and fertiliser. Dr Jones said, they as a Ministry, know that mobilising tax revenue is critical to helping them achieved priorities, although they still benefit from aid, over 60% of their total revenue comes from taxes.
She said the money is what enable them to invest in education and health, build roads and infrastructure to improve the supply of clean water and energy, support agriculture and local food production, pursue adaptation measures in response to climate change risks, and expand social safety nets to protect their most vulnerable citizens.
Dr Jones said strengthening public finances and improving domestic resource mobilisation is a top priority for them; even in that very challenging economic context, they must create the fiscal space to allow them to safeguard their people, ensure debt l sustainability, and continue making progress on our National Development Plan.
She also explained that they have already implemented fiscal measures to mitigate the impacts of the economic situation; maintained the zero-import duty and Good and Services Tax on imported rice, deferred taxes on the importation of essential commodities, and cut taxes in half on essential commodities such as cement and iron ore etc; provided cash transfers to over 35,000 poor and vulnerable households under the Social Safety Nets Project, and continue to support Micro, Small and Medium Enterprises through the MUNAFA Fund, which has benefitted over 6,000 citizens.
Noting their plan for 2023, she said includes several measures to increase those venues, while also improving the health of their people and protecting the environment. She added that they have plan to increase taxes on harmful products like tobacco, alcohol, and sugars sweetened beverages, switching from valorem rates to specific rates that will discourage consumption and bring in new revenue; increase taxes on vehicles and plastics, which will help reduce pollution and damage to their environment; and also plan to leverage climate finance including carbon credits, REDD payments, and grants for reforestation and conservation to bring in revenue and promote a healthy and clean environment. She therefore said the budget for next year includes broadening the base for the Goods and Services Tax – about 60% of the GST base is currently exempt such as digital services and insurance still remain untaxed. She said they would continue to support local governments in boosting revenue mobilisation to minimise their reliance on central government grants and develop a new fiscal decentralisation policy that will provide local councils with additional revenue streams and support the implementation of a modernised property tax system with up-to-date property rolls and valuations to increase the tax base for city and municipal councils. On that note, she declared the the conference opened.
The opening day of the conference was later climaxed with presentations on revenue potential and performance, tax and equity, customs, exercise taxes and tax administration, and taxpayer engagement.
