How many Sierra Leoneans realize the impact of corruption in our tax subsystem? How much do we know that infrequent electricity or perhaps prevalent blackout in the last six months cannot be unconnected with corruption? How much do we know that water shortage or unavailability across Freetown is tangential to administrative malpractices? How much do we know that our inability to feed ourselves, in spite of impressive effort at getting the agricultural sector buoying, may point to our indulgence in corruption? Corruption in the tax subsystem continues to pose a challenge and constantly undermines fiscal policy, revenue generation, budget allocation and government investment in social security.
For Africa, including Sierra Leone, tax concessions and exemptions, legal as they may be, appear to be an escape gorge where nations are ripped off their most needed revenue – most of the breaks are granted to cronies amounting to tax evasion. Tax incentives can result in huge revenue loss; in most cases, agents within government subsystems facilitate the concession or exemption process. Impressive achievement in tax collection in Sierra Leone since 2007-2012, where in fact 2011 stood out as a prosperous year tax growth of 49.5 percent reaching a record revenue collection of Le. 1,428.8 billion or Le. 1.4 trillion, and until now, is beset by indiscriminate tax breaks. It is noted that revenue loss from custom duty and goods and services tax in the name of tax incentives is estimated at 8.3 percent of GDP translating into Le. 966.6 billion in 2012 (Loosing Out: Sierra Leone’s Massive Revenue Losses from Tax Incentives, 2013).
Tax concessions or exemptions, as I see it, can be likened to an unfair act beneficial to top companies and individuals connected with politicians that fast track or facilitate granting. In Ghana, Uganda, and Malawi, perceptions abound that tax enforcement is not uniform: companies related to politicians, top civil or public servants, get unimaginable tax breaks (Global Integrity Report, 2011).
Corruption continues to plague tax administration in many African countries, if not all, and nations like Mali and Senegal including Liberia and Guinea suffer compounding hardship. Embezzlement and extortion characterizing African tax administration, Sierra Leone included, account for high revenue loss. Illegal appropriation and diversion of public funds deprive states of badly needed revenue that could have been channeled into building additional water dams, constructing power or electricity infrastructures, improving the health sector, and strengthening the educational system – catering for decent living. No doubt, effort at nabbing tax officials involving in corrupt practices continues unabated in many African countries including Sierra Leone, where in fact, recently, the Anti-Corruption Commission secured conviction against five NRA-EcoBank officials for related corruption offences including misappropriation of public funds.
Tax extortion is mostly common in our tax subsystem and this is so largely because taxpayers are unaware of the laws; and to beat the few that are aware, interpretation of the laws by tax agents indicates a far-reaching discretion in levying. Where unnecessary duties are levied calls for compromise and the greater the discretion the higher and attractive the illegal payment becomes. At Gbalamuya and other crossing points, such seeming isolated areas of operation – bereft of constant supervision and monitoring by authorities – create comfortable zones for malpractices, misconduct that is churning out billionaires by the day, whose detection and arrest may provoke tension among the unsuspecting public that hold such perpetrators as god fathers.
Cognizant of the catastrophic impact of corruption in our tax administration and apart from undermining government legitimacy to command civil obedience, effort should be made at instituting robust administrative anti-corruption measures that provide for promotion and enforcement of ethical standards, merit-base recruitment and promotion, and regular staff rotation schemes to prevent lucrative networks preying upon the foundation of national cohesion, national development, and patriotism. Integrity in the workplace is the most single self-regulatory mechanism that checks on our behavious and tailors them according to accepted norms and codes of conduct.
I also countenance introduction of information technology in tax administration – a measure to reduce perversion, rampant bribery, and face-to-face contact between taxpayers and tax officers. Application of ICT across the world has added enormous speed and comfortable ease in business transactions. Electronic filing, bank payment and scanning systems do not only mitigate corruption considerably but also track contrabands, which can be a threat to national security. This also enhances transparency and accountability and as well increases government revenue generation. The introduction of the ASYCUDA system at the Freetown port is a step in the right direction, but infrequent power supply is causing unbearable delay in the scanning process – leading to congestion at the dock and hampering efficient and effective revenue generation.
On local tabloids it was reported that the Anti-Corruption Commission led by its Deputy Commissioner Shollay Davies made a visit to Bollore Africa Logistics operating at the Freetown port. Issues that came out of the visit was the boring long queue of containers that would wait for days for scanning and would be unable to go through the process due to the tiring scanner. This may have embarrassed National Revenue Authority (NRA) that is poised to increase revenue through taxation. Notwithstanding that, the resolve to increase revenue and to address corruption at the port has been demonstrated in a tripartite memorandum of understanding between ACC, NRA, and Sierra Leone Port Authority. The three parties have expressed shared commitment to pool resources, share intelligence, and coordinate personnel for the eradication of corruption in tax administration in order to boost government’s fiscal and development programmes and to attract foreign direct investment.
I am of the view that taxpayers have a crucial role to play for the eradication of corruption in our tax subsystem. They need to familiarize with existing tax laws, understand how duties are levied in order to detect overcharge, and also be aware of the redress channels. The Anti-Corruption Commission is one sure complaint mechanisms.
Written by Alimamy Lahai Kamara. He works in the media department of Sierra Leone’s Anti Corruption Commission.