By Yekeh Kwaytah
Loopholes in Liberia’s tax administration including granting of investment incentives to multinational corporations and duty waivers for lawmakers are hampering revenue inflow as several millions vanish annually.
More than $300 million United States dollars is lost to tax waivers and incentive programs yearly, Gabriel Montgomery, deputy commissioner general for technical services of the Liberia Revenue Authority (LRA) told lawmakers Tuesday in the capital Monrovia.
“We believe that incentives can be good if they are targeted towards investment and growth promotion,” Montgomery said.
“There is a need to revisit our incentive policies and monitoring frameworks to safeguard our revenues.”
Domestic revenue mobilization is the lifeblood of the country’s development as donor support dips.
Global lender IMF encourages the authorities to streamline tax exemptions including duty waivers for parliamentarians, returning Liberians and tax withholding for government contractors. Adopting a package of tax exemption reduction will lead to a revenue yield of at least $15 million United States dollars or 0.4 percent of GDP by October 2023, the Fund said.
Domestic revenue accounts for $656.6 million or 84% of the $777.9 million national budget Lawmakers are currently reviewing for appropriation.
“The past fiscal year recorded the highest level of domestic revenue performance since the end of the civil conflict,” President Weah said in his end-of-term address to the legislature.
Improvement in domestic revenue mobilization driven by higher receipts of tax and non-tax revenues, especially taxes on international trade, income and profits have kept the country’s economic recovery on track, he said.
Liberia’s economy is expected to expand by 4.2% this year from a 3,7% low in 2022 after two consecutive growth contractions in 2019 and 2020.