High & Multiple Taxes Stifle Vital Roles of Local Manufacturers in Economic Growth

By Amin Kef (Ranger)

The Sierra Leone People’s Party (SLPP) Led Government, spearheaded by President Julius Maada Bio, is committed to revitalizing the local manufacturing sector, aiming to bolster economic development. While local manufacturers play a pivotal role in Sierra Leone’s economic progress, they are grappling with a formidable challenge in the form of exorbitant and numerous taxes that hinder their growth prospects and create economic instability.

Local manufacturers are burdened by a complex and onerous tax system, navigating through import duties, excise taxes, value-added tax (VAT), income tax and local council rates. These multiple taxes place a substantial financial strain on local manufacturers, constraining their ability to invest in innovation, expansion and job creation.

Import duties, imposed on essential raw materials and machinery required for production, inflate the costs of inputs, rendering local goods more expensive to produce. Consequently, these higher production costs result in elevated prices for locally manufactured products, which can dissuade domestic consumption and make imported alternatives more appealing.

Excise taxes, levied on specific goods, including items used in the production process, further escalate production costs.

Value-added tax (VAT), when applicable, is levied on the final price of goods and services. Local manufacturers are compelled to pass on this tax to consumers, potentially compromising the competitiveness of their products in the market, especially with high VAT rates.

The cumulative effect of high and multiple taxes is the increased cost of production, rendering locally manufactured goods less competitive compared to imported alternatives in both domestic and international markets. Fulfilling tax obligations strains local manufacturers, making it challenging for them to invest in technology, enhance productivity and create more employment opportunities.

Business expansion is hindered by the presence of numerous and burdensome taxes. The potential of indigenous manufacturers to contribute positively to the nation’s economic development remains untapped, if not rendered virtually impossible.

Excessive taxation could drive local manufacturers to operate in the informal economy and seek ways to evade taxes, potentially depriving the Government of significant revenue and undermining the sustainability of the manufacturing sector.

The solution lies in simplifying the tax system to make it more comprehensible and easier for manufacturers to fulfill their tax obligations. Additionally, incentives, such as reducing import duties on essential machinery and raw materials to lower production costs, are vital for encouraging investments.

Government’s support, including access to finance and technical assistance, can further bolster the local manufacturing sector.

To unlock the full potential of the local manufacturing sector and promote economic development, it is imperative for the Government, under the leadership of President Julius Maada Bio, to address tax challenges by implementing simplified, supportive and business-friendly tax regulations. These actions will pave the way for a thriving local manufacturing sector, resulting in increased employment opportunities, innovation  and overall economic growth.


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