Tax dodgers to face hard times in Sierra Leone?

The Sierra Leone Telegraph: 27 February 2013

water poverty4Sierra Leone has no business being poor, if only government can ensure that tax payers, especially large corporations, foreign owned companies, and local businesses with connections in high places pay equitable and appropriate taxes, and that government uses the tax it collects for the benefit of the people.

Classed as one of the poorest nations in the world, the country relies on foreign aid for over 40% of its public expenditure.

With a very narrow tax base and a single-track economy, driven mainly by iron ore production, there have been loud calls for the economy to be diversified.

But those calls have fallen on deaf ears.

The British government, through its Department for International Development (DFID), has invested millions of dollars to help restructure the economy and strengthen the country’s Tax Collecting Agency – the National Revenue Authority (NRA).

kallah-kamara2013In the last five years, efforts to reorganise and reform the NRA have produced some positive changes and results.

(Photo: Commissioner-General of NRA – Haja Kallah Kamara)

But the impact of those changes on the collection of taxes and the transfer of the revenue collected into the Consolidated Revenue Fund, have been less than transparent and corrupt free.

The recently published Report of the National Audit Office is replete with evidence of financial mismanagement and impropriety by the NRA itself.

The president has promised to act accordingly, to ensure that missing funds are recovered and those responsible are punished. But the Report is fast becoming yet another chapter in the sad history of the country.

So why the noise now, about squealing phantom tax dodgers? And is there light at the end of the dark tunnel?

John Baimba Sesay – the government’s spokesman reports:  

Commissioner for the Domestic Taxes Department (DTD) of the National Revenue Authority (NRA), Ibrahim Sorie Kamara has informed Sierra Leoneans, both at home and abroad, that the NRA is always committed to exceeding annual targets, as is the case in the past four years. He spoke on Tuesday, 26th February, on SLBC TV’s ‘Good Morning Sierra Leone’ breakfast program.

The NRA was created by an Act of parliament, 2002 to among other functions, collect revenue for the state.

Over the years, the institution has undertaken a number of reforms, aimed at moving in line with international best practice.

diamondIt  has been implementing a modernization programme, which has led to the introduction of the Taxpayers Identification Numbers(TIN), the Automated System for Customs Data (ASYCUDA ++) and the Goods and Services Tax(GST).

A new Domestic Taxes Department (DTD) was established, as well as the enactment of the 2011 Customs Act.

DFID has been supportive of the Authority’s modernization efforts, especially the reconstruction of customs posts that were destroyed in the border regions of Koindu and Buedu in the Kailahun district, during Sierra Leone’s civil war.

Speaking on the institution’s debt collection plan for the coming weeks, Commissioner Ibrahim Sorie Kamara said, that the institution will be embarking upon a debt collection campaign in the coming weeks, since they have an obligation at the NRA to collect revenue for the government.

“Taxpayers have been complying and some have been doing it voluntarily…” Commissioner Sorie said, whilst also stressing that since 2012, some have not met their tax obligation, such as filing in their tax returns.

fishing in sierra leone3He said that data compiled by the NRA show taxes owed, running into billions of Leones.

He explained that there are several instruments they can use in their debt collection campaign: “We can name and shame defaulters…”, he said, further explaining that the institution can take court action against defaulters, or prevent them from  importing and exporting goods in and out of the country, or preventing defaulters from travelling.

The business premises of defaulters could also be sealed off, he said. Those owing taxes he said, include individuals, parastatals, partnerships and organizations.

In the area of innovation, he spoke about the ASYCUDA system in the operation of Customs as well as plans of “…rolling ASYCUDA to the border posts”.

ASYCUDA is a computerized system that apparently helps Customs operations to provide timely, reliable and cost efficient service to customers in the clearance of goods and trade facilitation.

The Domestic Taxes Department (DTD) is the result of an administrative arrangement, which has succeeded in merging the Goods and Services Tax, Income Taxes and Local Excise Unit of the Customs and Excise Department.

Taxpayers are segmented and structured on functional basis, rather than tax type.  This merger practically allows greater flexibility, enables better focus on service delivery, and encourages specialization and improved economies of scale.

It also helps to streamline and simplify processes and procedures and reduces compliance burden on taxpayers.

Revenues collected by the NRA are placed into the Consolidate Revenue Fund, as dictated by Section 27 of the NRA Act. Such revenues have over the years been used by government in meeting domestic development projects and needs.

But, despite the huge successes scored by the NRA in exceeding annual targets in the last four years, it is also faced with the challenge of some taxpayers often trying to evade tax payment.

This latest move by the Authority is in line with its desire to always meet people’s expectations, and effectively contribute to the Agenda for Prosperity of President Ernest Koroma.

The changes will make it hard and tough for tax defaulters.

Editor’s Note:

This is an interesting discussion of what could have been, but where is the strategy to ensure that those being allowed to evade taxes and avoid meeting their legal obligations are brought to book?

Where is the honest and committed strategy to ensure that ALL taxes collected by government are used for the intended purposes?

What action is being taken to punish those in and close to power, who themselves are the biggest tax dodgers for evading the payment of taxes?

Until those questions are answered, the people will continue to remain sceptical and cynical of what the government says.

 

 

 

 

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