REVISIT 2016 FINANCIAL ACT: GOVERNMENT LOSES Le180BN ON TAXESJune 9, 2018
The self seeking and bias Financial Act passed under the All Peoples Congress party by Parliament is causing massive financial loss through taxation by the current Government and successive Government if no meaningful and productive action is taking to remedy or resolve the situation. The basis of the Act as was explained by a former Minister in the outgone Government of the All Peoples Congress was to protect local Companies and thereby strangulating foreign businesses and entities doing business in the Country. It may be a prudent action for Government to protect local Companies against unhealthy foreign Competition but should not be against the interest of the people. Taxation in any country is the backbone of revenue generation as all government depends on effective revenue generation to run the affairs of the state, but when loopholes are created in revenue generation the Government losses a lot and most of the projects that should have been financed are left undone or incomplete. A case in point that is currently warranting the attention of the Government that is not only key to the survival of the state but a principal source of revenue generation has not been treated seriously by the past political administration. If on the other hand, it was treated seriously, it was done with the focus of satisfying a group of individuals while the state was being deprived and thus losing huge revenue generation.
It has been estimated that the past political administration was losing between Le150 to Le180 Billion annually as importers of foreign beverages and products have refused importing these products, due to the unreasonable taxation levied against them, which objective was specifically to protect local Companies that are incapable of meeting the demands of the consumers and above all, cannot produce quality consumable products for the populace.
Most of the shops in the Country are empty without foreign beverages and the quality of local products visible on the shelves is not only of poor quality but scare in supply while demand continues to increase. Most economic theories have lent credence to the subject of scarcity, which is an artificial situation created by monopolists with the sole objective of increasing the prices of goods. Additionally, scarcity can only survive in a market situation where there is no healthy competition and a healthy market situation brings in innovation, quality, choice and gives preference to consumers. Unfortunately, this is not the situation created and what has been created is a monopolistic atmosphere that has given absolute preference to a local company that cannot meet the demands of consumers and produce quality goods. As a result of this unhealthy make-up the Government is losing revenue that should have been judiciously utilized to improve the state or use to compliment projects that could have been useful to national development. Consequently, apart from the inability to meet with the demands and the production of quality products, some of the importers are using what could be described as the “backdoor method” in bringing to the country some of the imported products and the “backdoor method” is to go through the country’s porous border and sold the goods at exorbitant prices to consumers.
It was in the 2016 Budget that the former Minister of Finance and Economic Development Mr. Momodu Kargbo introduced what he referred to as the Local Content Syndrome, thereby giving total privilege to the Sierra Leone Brewery Limited to sell all alcoholic beverages such as beer and Stouts in the country.
He increased high customs duty and other related taxes on imported canned alcoholic drinks in his budget of 2016 in a bid to frustrate genuine importers of such drinks, thus creating what looks like an imposition of a monopoly market.
The decision of the Former Minister of Finance and Economic Development has been considered not in the interest of the country, especially when it was discovered that the then government was losing huge revenue, which was estimated between Le150- 180 Billion annually.
The Importers Association reportedly has drawn the attention of the new Minister of Finance and Economic Development Mr. Jocob Jusu Saffa of the bias and unproductive Financial Act and is requesting an amendment to the Act to avoid the new government of the SLPP losing huge revenue.
The IMF and World Bank are also reportedly not in support of the drive for high taxes to be levied or imposed on imported drinks. Notwithstanding such position, there is also a clear understanding that the Sierra Leone Brewery Limited is unable to meet the market demands and not capable of carrying out its liabilities as required by law. Subsequently, the National Revenue Authority (NRA) is reportedly losing significant revenues on taxes.
Meanwhile, inside sources at the Ministry of Finance and Economic Development have intimated this medium that since the present government is in dire need of revenue to improve the economy the Julius Maada Bio Government will not sit back and allowed such huge revenue to find its way into the hands of smugglers who are purchasing these goods from neighboring Guinea and take advantage of the loopholes in the Country’s border