Businesses Reject Ellen’s Proposed Tax Hike

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A number of influential business entities including Cellcom GSM, the Liberia Coca Cola Bottling Company, the Monrovia Breweries, as well as the Tobacco Associations of West Africa, amongst other businesses and institutions, have rejected President Ellen Johnson Sirleaf’s proposal to the Legislature to increase excise tax on tobacco, phone calls, and alcoholic and non-alcoholic beverages.

The business entities said the tax increment would not only affect production and sales, but would also encourage redundancy, unemployment and poverty.

Lonestar Cell MTN was the only company that supported the proposal of the tax increment and promised to bear the responsibility without passing the cost onto the consumers.

The overwhelming rejection of the tax increase took place yesterday at a public hearing held by the Joint Committee of the Ways, Means, Finance and Development Planning of the Liberian Senate and the House of Representatives in the Joint Chambers of the Legislature.

The public hearing aims to review the Special Amendment to the Revenue Code of 2011 which calls for the imposition of one cent (US$0.01) per minute on phone calls and the other five amendments.

Cellcom was represented by William F. Saamoi, Jr., Vice President for Government and Regulatory Affairs; Monrovia Club Breweries was represented by Dr. Nelson Oniyama, General Manager, and Madam Thelma R. Dennis, Sales, Marketing and Customer Relations Manager; while Lonestar Cell MTN was represented by its Deputy Chief Executive Officer, Mr. Louis Roberts.

Other business entities were present, including the Water Producers Association of Liberia and the Tobacco Association of West Africa.

It may be recalled President Ellen Johnson Sirleaf wrote the Legislature (House of Representatives and Senate) that beginning July 1, the government will more than double the excise tax on all tobacco products if the Legislature approves the Special Amendment to the Liberia Revenue Code (LRC) as proposed by President Ellen Johnson Sirleaf. In addition, every call within Liberia would be expected to incur a tax of US$0.01 (1 U.S. cent).

The imposition of excise of $0.01 per minute on phone calls was proposed by the President to support the 2016/2017 Fiscal Budget.

In her communication to the Legislature, the President also wants the Legislature to increase the excise rate on alcohol beverages from 35% to 45% and more than double the excise rate on tobacco products, from 35% to 80%.

The Chief Executive further requested the adjustment in the GST rate from 7% to 10%; a revision of Section 16 to grant Special Investment Incentives to certain businesses; as well as a revision on Section 904 on the Advance Payment or Turnover Tax.

The special amendment to the LRC, according to President Sirleaf, is to provide incentives for additional investment in the economy and the direct revenue implication of US$30.1 million to support the FY16/17 National Budget.

“Mr. Speaker, in my message transmitting the FY16/17 Proposed Budget, I mentioned to you that certain assumptions in the resource envelop have been placed under ‘Contingent Revenue’ because some legislative actions will be required in order to realize those revenues,” the President wrote.

She added: “Honorable Speaker, I will appreciate if these actions can be taken along with the passage of the National Budget so that development priorities as outlined in the budget can be fully implemented.”

No conclusive decision was made yesterday at the Joint Committee hearing, which only indulged the presentations of the various business representatives. A second and final hearing is expected later this week.

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