By Amin Kef (Ranger)
Sierra Leone’s local manufacturing companies have received a significant show of support from President Julius Maada Bio, who has acknowledged their substantial contributions to the country’s economic growth. As Sierra Leone continues on its path of economic development, local manufacturers are urging the government to introduce tax policies that would provide them with a competitive advantage over importers of consumer goods and services.
The Ministry of Finance has initiated consultations with key players in the private sector to develop tax policies that will be included in the 2024 Finance Bill, set to be presented by the Minister of Finance later this year.
These consultations are part of the Ministry’s approach to formulating revenue and tax policies in collaboration with public institutions and the private sector, ensuring that their input is considered and cooperation is sought when implementing these policies.
Samuel E.B Momoh, the Principal Deputy Financial Secretary (PDFS), stated that these engagements are focused on discussing tax policy proposals for the Finance Act of 2024, aligning with principles of public policy formulation. These discussions will help inform taxpayers about the government’s plans for revenue generation and enable them to meet their tax obligations more predictably.
These consultations will also extend to importers, exporters, local manufacturers, telecom companies, and other private sector stakeholders.
As part of the ongoing FY2024 bilateral budget discussions, the Ministry of Finance is already collaborating with various government agencies to identify areas where revenue generation can be enhanced to bolster domestic revenue.
The introduction of the Digital Excise Tax Stamps on October 1, 2023, is the result of a joint effort between the Ministry of Finance and the National Revenue Authority (NRA). This initiative aims to streamline the verification, tracking, and monitoring of excisable goods, combat illicit trade, and secure government excise revenues. The Digital Excise Tax Stamps feature advanced security measures and codes on products or packaging to prevent counterfeiting and enable comprehensive tracking. For locally manufactured goods, these tax stamps will be applied immediately after packaging at the production facility.
However, some local manufacturers have voiced concerns that the introduction of Tax Stamps has put a significant burden on them. They argue that the cost of 0.03 cents for each stamp, which amounts to 725 Leones for each stamp on a single bottle, is affecting their businesses, including bottled water.
Local manufacturing plays a crucial role in sustaining the nation’s economy. Local manufacturers contend that unfavorable tax regulations are hindering their operations and limiting their growth. While imports are essential for the availability of goods and services, a well-balanced economic ecosystem necessitates the growth and sustainability of domestic manufacturing.
Local manufacturers stress the importance of implementing tax regimes that favor them over importers of consumer goods and services. They believe that a well-structured tax regime has the potential to significantly boost the economy, promote self-reliance, and foster prosperity.
Additionally, local manufacturers argue that their businesses not only create jobs for skilled and unskilled labor but also contribute to reducing unemployment rates. They emphasize that a thriving manufacturing sector leads to increased economic activity, stimulates GDP growth, and encourages investments in technology, infrastructure, and innovation.
Moreover, local manufacturers point out that promoting local manufacturing is vital to reduce a country’s reliance on imported goods, which can help mitigate trade imbalances and deficits. They argue that in times of crisis or emergencies, heavy dependence on imports for essential goods can leave the nation vulnerable, making local manufacturing essential for self-sufficiency and national security.
Some local manufacturers express their willingness to invest in research and development to drive technological advancements and knowledge transfer. They believe that fostering a skilled workforce can be a natural outcome of innovation, enhancing the nation’s competitive edge.
Local manufacturers urge the Government, particularly the Ministry of Finance and the National Revenue Authority (NRA), to recognize that tax regimes favoring domestic manufacturing can offer numerous advantages to the economy. These advantages include reduced dependence on imported goods, access to domestically produced alternatives, and stimulating domestic consumption through tax incentives, reduced corporate income tax rates, investment tax credits, and accelerated depreciation for manufacturers.
Local manufacturers also suggest that adjustments to customs and import duties can be made to favor domestic goods, making imported products comparatively more expensive and boosting domestic consumption. They emphasize that offering tax credits to companies investing in research and development can ignite innovation, leading to the development of new products and technologies that enhance the competitiveness of domestic manufacturers.
Local manufacturers believe that well-structured tax regimes favoring domestic production can have a profound impact on the economy, including job creation, economic growth, reduced reliance on imports, and the promotion of self-reliance and national security. These tax regimes can also stimulate investments, technology transfer, and innovation, positioning the domestic manufacturing sector as a global contender.
As Sierra Leone continues to navigate its economic landscape, Members of Parliament are urged to actively advocate for supportive tax policies for local manufacturers. The design and implementation of these policies should be carefully planned to ensure fairness and sustainability. By doing so, Sierra Leone can strengthen its economy and international trade position, solidifying its status as a beacon of self-sufficiency and prosperity in the region.
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