By Fatmata Jengbe
On the 24th February 2020 the Public Financial Management (PFM) consortium led by Christian Aid Sierra Leone and four partners including the lead, Budget Advocacy Network, Restless Development and the Centre for Accountability and the Rule of Law (CARL) launched a tax perception survey report at the British Council.
All the organizations and civil society bodies are working towards strengthening the aspects of public accountability, transparency and participation of the citizenry in all matters dealing with Public Financial Management in Sierra Leone. With support from UK Aid the consortium is currently implementing a Project titled: “Strengthening Public Financial Management, Anti-Corruption and Accountability Institutions in Sierra Leone”.
Naturally, there is always the desire to know how the Government is making use of taxpayers’ monies and what impact(s) the taxes have made in the overall national development of Sierra Leone. A good part of the taxes is derived from businesses; salaries of civil servants; workers; entertainments; entrepreneurs; petty traders; investment companies and the likes. Against this backdrop it has been established that it is but vital to understand taxpayers’ wider views of Government and how such relates to their attitudes and motivation towards paying taxes.
It has become apparent that Government’s main domestic revenue source is the various tax levies. It is not a secret that the Government is sourcing revenue from the National Revenue Authority (NRA) and other revenue generating institutions which is allocated to Ministries, Departments and Agencies (MDAs) for the running of the business of Government to ensure national development.
The NRA has been hitting various targets –the current is in trillions. Government’s expenditure keeps improving as the bar in setting the revenue generating targets is kept high. Now to what extent is the revenue generated from taxes benefit the general masses? The TPS report state that 34% of the 2,755 tax payers interviewed in the perception survey think that the Government is using tax revenues in the right and correct way. 25% said corruption in Government circles demotivates them to paying taxes and to under-declare their tax income.
On the scope to strengthen social contract on tax and provision of services, 45% of businesses said they pay tax because it contributes to the provision of public services such as the Free Quality Education and roads. 79% said if they had seen more services being delivered in their area by the local council, they would be willing to pay more taxes.
Almost all tax payers targeted in the survey said the taxes are too high and authorities in charge of state resources are mismanaging the country’s revenue. With regards businesses which said they didn’t pay tax, 37% of businesses said they didn’t pay tax (1007 in the survey), and of the 1007, 72.9% said it was because the rates were too high and blamed the multiple tax rates applied to their businesses.
The current administration has made revenue mobilization a key Government priority and has set to achieve a domestic revenue-to-GDP ratio target of 20 % by 2023. Current revenue to GDP ratios is well below this target, although recent reforms are starting to take effect. Domestic revenue is the main source of Government resources needed to provide essential public services and reduce poverty as outlined in the Medium-Term National Development Plan (MTNDP). Current domestic resources fall short of the levels required to meet the Government’s development aspirations.
The survey targeted a total of 2,755 businesses across the 16 administrative districts of the country; and achieved a response rate of 98.4 %. It collected data from businesses on their perceptions, knowledge, attitudes and practice in relation to taxes; the tax system; services; accountability in the use of taxes by the Government; tax administration reforms; and the conduct of the staff of the NRA and local council when carrying out tax administration processes. The survey covered a range of business types excluding the UN Agencies, Non-Governmental Organizations (NGOs), Community Based organizations or CBOs (except for those that are directly engaged in the production and distribution of goods and services in their localities), and MDAs.