Between NRA and 2011 budget
President Koroma has announced a cabinet that one could describe as having a national flavor and this is what is expected of him, especially taking into account the level of development we are continuing to see as a nation. Several changes were made by His Excellency but one major decision he took was to retain the Minister of Finance and Economic Development, Dr Samura Kamara. Dr Kamara has stood the test of time, especially following the global economic meltdown. I must commend him for that. (Photo: NRA’s Acting Commisssioner-General, Haja Kallah Kamara)
On the 12th of November this year, Dr Samura Mathew Wilson Samura was at the House of Parliament to deliver his statement of economic and financial policies for the financial year 2011. His statement was based on the theme, “scaling up infrastructural investment to support higher economic growth and widen opportunities for job creation and income generation…” There are several areas of interest to me, as contained in the speech but I am specifically going to look at the revenue aspect of his speech, with specific reference to the role of the National Revenue Authority in meeting the economic expectations of both the government and the people of Sierra Leone for the country’s development agenda.
Dr Samura Kamara gave the 2010 budget performance of the country when he stated, that “…domestic revenue collection is projected at Le 987.8 billion …in 2010…” and that preliminary data for the first three quarters of 2010 indicate actual domestic revenue collected amounting to Le 703.4 billion (paragraph 24). He spoke of government’s commitment to infrastructural development by stating that “in every country that has developed and significantly improved the lives of its people, a robust programme of infrastructure investment is key…” This he said is true for Sierra Leone because the country is striving to achieve ‘both high sustainable economic growth and the MDGs. For him, the 2011 budget will continue to refocus public expenditure towards projects with potential tangible benefits to Sierra Leoneans, “including in trunk and feeder roads; in electricity and clean water…”
There was this aspect of the macroeconomic performance in 2010 of the country when he said, “…despite the lingering challenges of the world economic meltdown, the country was able to sustain a stable macroeconomic environment “with robust economic growth…” and that the country is experiencing strong economic growth in the area of agriculture, mining and services sectors, as well as a rebound in domestic manufacturing as a result of increased private investments into these sectors…” To this end, the NRA must have played a very vital role.
Dr. Samura spoke on the strategic objective of the Financial Year 2011 which is to enhance economic growth and social transformation, while maintaining macroeconomic stability. In pursuit of this, government’s objective is to encourage private businesses to grow and increase employment opportunities and the macroeconomic stance of the government will be to ensure a conducive environment to foster private investment activities. The Fiscal policy in 2011 will also complement monetary policy in ensuring stable consumer prices and low domestic interest rates to encourage investment activities.
But in all of this, there is a crucial role to be played by the National Revenue Authority, especially in collecting the needed revenue for government. It is a fact that a nation cannot develop when its people are not willing to meet their tax obligation. Therefore, if the NRA is to perform this crucial function of collecting the needed revenue for government, there is every need for continuous support to the institution, especially by taxpayers. Even President Koroma, during the State Opening of Parliament called on Sierra Leoneans to pay their taxes. This is because taxes play an integral part in national development.
The Minister gave a budget profile (paragraphs 74-81) for the Financial Year 2011 and in paragraph 75, he gave a domestic revenue projection of Le 1.16 trillion or 13.3% of Gross Domestic Product for 2011.And this is the highest “in a single year since the establishment of the NRA…” The introduction of the GST in 2010 was no mistake by government and the NRA, because even from what the Minister said, its introduction has been a resounding success and “has shored up domestic revenue…” For 2011 alone, there is a project for the GTS of 299.0 billion Leones.
If the NRA is to collect all these revenues, there are going to be more measures of improving tax collection and tax compliance. There are plans at the moment to introduce the Domestic Tax Department, by next year. This will see the merging of the Income Tax and the GST. The National Revenue Authority (NRA) is undertaking a Modernization Programme which is aimed at increasing effectiveness and accountability in revenue collection. This plan will also effectively help in significantly improving on the delivery of services to taxpayers and stakeholders. Part of this plan is to merge the Income Tax Department and the Goods and Services Tax Department and to be named the Domestic Tax Department. The introduction of the Domestic Tax Department is not a new tax but an administrative change in the NRA. The DTD will help in harmonizing operations, streamlining accountability, strengthening functional and interdepartmental linkages and promoting transparency & objectivity and also will lead to revenue enhancement & efficiency in delivery of taxpayer services.
And in the words of the NRA’s Acting Commisssioner-General, Haja Kallah Kamara, the DTD will be one more success story of the agenda for change of H.E. Dr. Ernest Bai Koroma as it will ‘integrate different tax bodies; encourage specialization; and significantly increase revenues, and would help our country to become less dependent on foreign donors’. Also, even the Commissioner for this department, Ibrahim Sorie Kamara has spoken of his plans, aimed at “improving tax compliance at a reduced cost, both in time and money…” Not only that the Commissioner said “We will widen the rental income tax base by doing a comprehensive survey of property owners, amending and improving laws on rental and capital gains tax, maintaining and updating taxpayers registration and setting up investigative mechanisms to track down unregistered businesses..” These are all ways of improving tax collection and compliance.
Also, a Revenue Management Bill will be laid before the House of Parliament for enactment and the objective for this, according to the Minister “is to regulate the management of revenues with particular reference to the granting of tax incentives and discretionary duty waivers. Also, as a way of improving tax compliance in accordance with relevant tax provisions in the Income Tax Act 2000, government will enforce penalties for tax evasion, delays and failures to file tax returns, falsified quarterly tax payment and book keeping. And that the National Revenue Authority will “levy and collect interest on the payment of tax…” This is encouraging and it is hopeful, that more revenues will come for the country and people of this country. The NRA will definitely live up to the expectations of government and Sierra Leoneans.
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