By Kemo Cham
The Sierra Leone government has proposed a series of tax amendments aimed at boosting its revenue base as it unveiled an ambitious budget line for 2017.
Some 16 tax proposals were presented to parliament on Friday contained in the
The government also revised the presumptive income tax rates for commercial vehicles and motorbikes, as well as for alluvial gold and diamond mining activities.
Minister of Finance and Economic Development, Momodou Kargbo, said in his traditional budget speech to the House of Representatives that the move, which is set to yield some Le40 billion, was necessitated by the desire to meet best practice.
“The provisions amended are in line with best practices with the objective to enhance revenues as well as strengthen administrative efficiency,” he said.
The 2017 budget was presented on the theme: “Recovery through Economic Diversification and Fostering Entrepreneurship.” This, said the minister, was because it would be dedicated to accelerating economic recovery and strengthen the resilience of the economy to withstand future global shocks, as experienced in the past three years.
The total proposed budget is estimated at Le5.4 trillion, representing 17.8 percent of GDP, compared to Le4.8 trillion (17.9 percent of GDP) in 2016.
According to the statement, about 94 percent of projected additional resources, amounting to Le780.1 billion, will be used to finance key statutory expenditures, including the upcoming 2018 general elections, the planned national civil registration exercise, the post-Ebola recovery programme, and Debt Service payments.
This means that allocations to Ministries, Departments and Agencies (MDAs) have been largely maintained at their 2016 levels, the minister said.
He however noted that a few MDAs would see marginal increment in their allocations. Notable is the security sector which is expected to play major role in 2018.
The military was allocated Le90.4 billion, while the police got Le87.9 billion. The correctional services and national fire force were allocated Le34.3billion and Le8.8 billion, respectively.
In terms of ministerial allocations, the education sector receives the largest single chunk: Le275.3 billion. The government’s plan to introduce the school feeding programme saw a major addition to this portfolio of Le55.4 billion.
Agriculture appears to receive the second largest allocation at Le60.3 billion from government and Le260.1 billion pledged by its development partners.
The energy sector received the third largest allocation at Le170 billion.
According to the budgetary statement, the wages and salaries bill has been increased to 1.81 trillion (5.9 percent of GDP), compared to Le1.7 trillion in 2016. The minister said the increment is to be used to finance new authorised recruitment for civil service.
For all this, the contribution from domestic revenue is projected at Le3.6 trillion (11.8 percent of GDP), an increase from 2.8 trillion for 2016 (10.5 percent of GDP).
Continued depreciation of the leone and fall in iron ore prices, rise in domestic interest rates and external debt, among others, pose major risk to implementation of the budget, hence the tax amendments. In addition, the government also announced the discontinuation of the subsidisation of petroleum products.
The fuel subsidy issue has been a subject of heated debates within the last two months with government arguing that it has been losing a lot of money to the scheme.
Finance Minister Kargbo told lawmakers that between January and October 2016, subsidy on petroleum products amounted to Le200 billion.
Within minutes of the budget presentation to parliament, the Ministry of Information announced substantial changes in the pump price of fuel as a result of the removal of subsidy on petroleum products.
The pump prices of both petrol and diesel were markedly increased by more than 60% - from Le 3, 750 to Le 6, 000 per litre.
Some taxi drivers did not waste time to implement a reciprocal response by increasing their transport fares.
“None of these people [government officials] buy fuel with money from their pockets that is why they do not know how we feel about this,” says Alhaji Kamara, a diver of a commercial transport known as Poda Poda.
Some Sierra Leoneans took to social media to denounce the tax hike and fuel subsidy removal.
Copyright (c) Politico 2016
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