RATIONALISING THE NEW EXCISE TAX ON IMPORTED ALCOHOL BEVERAGESSeptember 1, 2016
These days the average Sierra Leonean – even among those in the class of “senior service” of old – can rarely afford to luxuriate in anything. I think I’ve made that point several times before, because present economic trends just cannot support it. So news making the rounds by close associates of Finance Minister Momodu Kargbo (himself a teetotaler) that he had long predicted the recent Excise Duty so painfully introduced recently on imported alcoholic beverages just to checkmate the luxurious appetite of imported beer drinkers should only be taken for what it was: a serious joke.
For all its contemplated economic benefits, the news did not resonate well with consumers – at all – because from interviews anchored in various electronic media, neither the National Revenue Authority (NRA,) nor the Importers Association (IA) was privy to the new tariffs, albeit they had been gazetted as far back as March this year before its subsequent enactment by Parliament. If you can believe that for the NRA then you can believe anything. In the case of the latter (i.e. the IA) seeking a review however, I anxiously await that to happen in Mama Sa Lone in these tryst times.
Many would have preferred a gradual introductory phasing in of the new Excise tariffs to the rashness with which they were implemented, given particularly the limited sensitization opportunities access to gazetted public notices often allow our (already acknowledged) highly illiterate population. So they view the measure as a desperate attempt by the Ministry of Finance and Economic Development (MoFED) to address a sustained and substantial national fiscal impairment. Their argument is that if indeed the measure was indeed to curtail our alcohol luxuries and safeguard local industries; wouldn’t it have been more prudent for the MoFED to have started with drinkable water products imported into the country at our substantial Forex costs? Also taking it from our national social health perspectives, shouldn’t the MoFED have (even if unilaterally) hiked the Excise duty payable on imported alcoholic beverages (and on the raw materials used in their local manufacture) that continue to have such debilitating psyco-social effects of our youths?
Again many citizens have no objection to assisting the government broaden its tax base, but would rather have preferred a more accountable arrangement that targets specific aggregated tax proceeds to specific identifiable government flagship deliverables like Health, Education, Industry and Infrastructure in our national budgets, and the cumulative impacts of which could be visibly matched by various tangible employment creation opportunities.
From a baseline of US$4 and US$10, also to be seriously affected by this new Excise tariff will be those informal sector traders who, in addition to Customs and freight levies will now also have to pay Excise duty of same per liter on their container-loads of alcoholic beverages bought like for example, from those “One Dollar” ($1) Shops and regularly shipped to them by distant relations to help them to eke a living within the various city business streets.
The government thinks and argues otherwise, that over time it has critically viewed unnecessary wastages inherent in Forex outflows for what it considers non-essential or luxurious items to wit: imported alcoholic beverages which it believes the nation could forego without detriment, in order to (a) assist local industrial growths; (b) create the enabling environments to incentivize and stimulate foreign direct investments whilst at the same time (c) create employment opportunities and giving weight to the local content policy. Under particular focus this time is the Sierra Leone Brewery Ltd (SLBL). Through their integration mechanisms the SLBL have been providing gainful employment to large scale sorghum farmers, whose produce are used as a replacement for imported wheat/barley previously used in manufacturing Star beer.
Good stuff!! But for how long should the SLBL that is only a year younger in age than its host country, continue to be pampered by successive governments? Even with their near monopoly, what has the SLBL got to show for all their years of existence in this country? Against a backdrop of seemingly unmitigated corporate profligacy to refurbish or acquire properties, purchase brand new vehicle fleets for its largely executive expatriate staff complement and to externalize huge “service fees” to off-shore interests, they have been reporting progressive losses, all of which continues to reduce their tax obligations.
Could it all have been deliberate? From mergers and acquisitions, through equity growth by public capitalization, management restructuring and outright closures, corporate disciplines on how to manage perennially loss-making concerns that hold their shareholders to a ransom abound.
And for how many more years will the breweries (and others like it) continue to import expatriates labour? If it has come to a matter for any country to begin to tighten its belts, then the first casualties should naturally be foreigners. There can be no two ways about that!
To quote a former Chief Executive of the Sierra Leone Bottling Company (formerly Freetown Cold Storage Company) “……..to the investor, the biggest challenge we face ……is manpower — qualified, dedicated manpower. Probably because of the war, Sierra Leone stopped producing professionals for a period of 10 – 15 years. You will find out that a lot of companies have so many expatriates they don’t need…..”
It is past 15 years since those words were uttered. What then is going on? Why do we have so many of them still here? Government should begin to direct its focus on all multinationals and to give them specific timelines for control to revert to local executive management and supervision within the ethos of our Local Content policy, just as it is happening in the sub-region – Ghana, Nigeria and The Gambia to be countries specific. In the meantime, the SLBL has a challenge to reciprocate the unmitigated government support they continue to receive, by improving on their beer products appeal and make it more palatable so as to attract more local consumers to their counters.
As a corporate executive, I would want to see this country harnessing as much revenue from as diverse a stream as would make it less dependent on donor support. To achieve that would entail holding regular and meaningful consultations or synergies between and with the public and private sectors, both to plug tax leakages and also identify potential tax bases that could be implemented with as little a painful impact on the citizenry as possible.
I shall digress for a short while on the immediate effects of the new Excise duty on imported beer stuffs at all watering holes last Friday, to illustrate how annoyed patrons were.
The “rounds”, were ostensibly fewer. Verbal exchanges were less heated, more orderly and decorous, and for a Friday, many blokes returned home early to tell their spouses that they were the first to come away from the usual crowd because “no di body (not di pokit) or dea feel too bright”. Most however, feel utterly disappointed that the public demonstration planned by the National Association of Chackman (NAC – with or without permit) to the Police Headquarters at George Street to protest against new price hikes per long cup did not materialize, because the bulk of the membership (comprising mainly “Akpeteshi” drinkers) withdrew their support at the last minute, citing discrimination that when the cost of the main ingredient for their own brew (sugar) was hiked without even a gazette notice, imported beer drinkers did not show solidarity by supporting their earlier call for a protest. So as it turned out, unlike the London Chief Metropolitan Police Officer who was having a rough time monitoring the Nottinghill Carnival, Francis Munu, our Inspector General of the Sierra Leone Police had a restful Monday 29th August.
Meantime I await to observe the alternative substitutes of pub crawlers (Poyo, Bomba, Man-Pikin etc) because at between Le15,000 and Le25,000 per choice of beverage pack, not many blokes would be lasting longer on the pitches anymore or could afford to host binges without compromising quality.
Neither of which translates to happiness for their wives anyway.