President Joseph Boakai won a closely fought election in November 2023, promising to tackle the growing cost-of-living crisis, build middle income economy in five years and put ordinary Liberians at the core of his policy priorities.
Having previously served as Vice President in Ellen Johnson Sirleaf’s administration from 2006 to 2018, Boakai often claimed to have been sidelined from key decision-making roles.
As an opposition leader, he was critical of then-President George Weah’s handling of economic issues and when elected President, he set up a committee to study the hardships faced by the population.
His initial action was to eliminate the fuel tax, but within a year, he reintroduced it, and nearly two years into his presidency, his administration has imposed taxes on an array of sectors from mobile money transactions to income tax and Goods and Services Tax (GST).
In January, President Boakai and lawmakers approved a comprehensive series of tax reforms similar to those introduced in Kenya, reforms that previously incited violent protests threatening the stability of that East African nation. The tax increases were agreed upon with the International Monetary Fund (IMF) to improve the government’s fiscal health in light of declining external revenues.
These changes are significantly affecting consumers, businesses, and multinational corporations operating in Liberia.
Key Tax Changes
Among the significant adjustments outlined in the 2025 budget law are:
- Increase in Goods and Services Tax (GST): The government plans to amend the GST law to raise the standard rate from 10% to 12% for certain goods and services. This measure is intended to boost tax collection efficiency.
- Reintroduction of Petroleum Surcharge: A petroleum surcharge of USD 0.20 reinstated, effective March 21, 2025. This initiative aims to increase revenue from one of the nation’s essential energy sectors.
- Minimum Corporate Income Tax Enforcement: Liberia will implement stringent enforcement of a minimum corporate income tax on a quarterly basis to ensure all businesses contribute fairly to national revenue.
- Tax Collection at Import Stage: A shift to a model where all taxes on imported petroleum products are assessed at the import stage is expected to combat under-declaration and smuggling, which have historically undermined revenue collection.
- Elimination of Fuel Tax Exemption: The government will remove a significant fuel tax exemption previously granted to a major mining company to create a level playing field for all industry players.
- Improvements in Personal Income Tax (PIT): Enhanced administrative measures will streamline the collection of personal income tax, facilitating more effective revenue collection.
Additionally, three separate companies manage the Freeport of Monrovia, the country’s main seaport, imposing various fees on traders.
Acknowledging Economic Challenges
On July 26, just six months after implementing IMF-approved tax measures, President Boakai conceded that his administration has struggled to control the rising cost of living. He disagreed with a report from the Central Bank of Liberia that indicated a decline in prices, asserting that many households continue to bear the burden of high living costs.
“While our economy is making steady progress, our domestic revenue remains limited, and many families continue to feel the weight of high prices,” Boakai stated during his Independence Day speech on July 26. “Transportation costs are too high, and the prices of flour, sugar, and other essential goods remain burdensome.”
The President’s comments sharply contrasted with the Central Bank’s assessment from July 23, where the Monetary Policy Committee reported that inflation had moderated to 11.1% in the second quarter of the year, down from 12.5% in the first quarter. The decline was attributed largely to falling food prices.
In light of these contradictions between reduced import costs and persistently high market prices, President Boakai announced the formation of a High-Level Presidential Ad Hoc Committee, led by Vice President Jeremiah Koung, to investigate these issues.
Seeking Solutions Amid Disparities
The establishment of this committee raises questions about the effectiveness of the Economic Management Team (EMT), which is chaired by Boakai and includes Vice President Koung. Reactivated on August 1, 2024, the EMT is charged with addressing ongoing economic uncertainties, coordinating fiscal and monetary policies, accelerating reforms, and enhancing regulatory oversight.
The EMT aims to bolster the oversight functions across various governmental ministries and agencies while developing policies to alleviate immediate economic challenges.
It also focuses on improving the implementation of the Public Financial Management (PFM) law, crucial for ensuring transparency and accountability in line with the ARREST Agenda for Inclusive Growth.
In June 2024, President Boakai convened a committee dedicated to ensuring rice availability and price stability, reflecting the administration’s ongoing commitment to tackle the fundamental issues affecting Liberians.
