High Taxes Leads to Escalating Smuggling & Socio-Economic Hardship

By Foday Moriba Conteh

The economic landscape of Sierra Leone is facing turbulent times as businesses across the nation grapple with the suffocating burden of high import and excise duties imposed by the Government, facilitated through the National Revenue Authority (NRA). The repercussions of these fiscal policies are not only felt among business entities but resonate deeply within communities, exacerbating the struggle for sustenance among the populace.

One of the most pressing concerns is the 5% Import Duty on rice, a staple food in Sierra Leonean households. This levy, ostensibly aimed at protecting local rice production, paradoxically burdens consumers with escalated prices, rendering this essential commodity less accessible to low-income families. Consequently, this has affected the standard of living, as having a square mean is beyond the reach of many.

Moreover, the imposition of a heavy Import Duties on various goods exacerbates the strain on businesses, stifling their competitiveness in the market and amplifying the cost of living for citizens. This indiscriminate tax regime not only hampers economic growth but also fosters an environment ripe for illicit trade activities, such as smuggling, further eroding the integrity of the formal economy.

The burden on businesses doesn’t end with import duties; excise taxes add another layer of financial strain. The 10% Excise Tax levied on certain goods, such as butter, escalates importation costs and drives up retail prices for consumers. Consequently, affordability becomes a distant dream for many, pushing them towards sub-standards lifestyles.

Furthermore, the 15% Goods and Services Tax (GST) on butter, as an example, further exacerbates the cost burden on consumers. This regressive tax disproportionately impacts low-income families, relegating them to a perpetual cycle of financial strain and limiting their access to essential commodities.

The cumulative effect of these desperate but unfriendly fiscal measures is the proliferation of smuggling networks that undermine national regulations and compromise public health standards.

Ironically, as smuggled goods flood the market, the Government loses significant revenue, further straining its ability to provide essential services and support socio-economic development initiatives.

In light of these challenges, there is an urgent need for the Government of Sierra Leone to reassess its fiscal policies in consultation with stakeholders from the private sector and civil society.

It must be noted that a more equitable tax regime that fosters economic growth, encourages formal sector participation and prioritizes the well-being of its citizens is imperative to steer the nation towards prosperity and stability.

As businesses continue to struggle and standards of living deteriorate, the onus rests on policymakers to enact reforms that promote inclusive growth and alleviate the burdens imposed by high import and excise duties. Failure to do so risks perpetuating socio-economic disparities and perpetuating the cycle of poverty for generations to come.


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