House Moves to Temporarily Suspend Tax Breaks

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The Chairman of the House’s Specialized Committee on Contracts and Concessions and Compliance, Rep. Clarence Massaquoi and members conferring with Speaker Bhofal Chambers and Deputy Speaker Prince Moye

The House of Representatives has voted unanimously to put on ‘hold’ or temporarily suspend the granting of tax breaks (investment incentive) to any bidden concession or companies over a report that government loses US$50 million annually in revenues from concessions and companies which are enjoying tax relief without any economic benefit to the country.

Investment Incentive is a scheme of government to waive tax aimed at stimulating private-sector interest in specified types of capital expenditure, or investment in areas of high unemployment or backwardness. These incentives may take the form of direct subsidies (investment grants) or corporate income tax credits (investment credit) that compensates the investors for their capital costs.

The Lower House has also voted to summon the Ministry of Finance and Development Planning, National Investment Commission, National Bureau of Concessions and the Ministry of Labor to receive the report for other implementations upon presentation to the body within two weeks.

In the 7-page preliminary report of the House’s Specialized Committee on Contracts and Concessions, Review & Compliance, the Committee said besides the government’s waivers of revenues to business entities, it has discovered that some concessions’ contracts have expired while other concessions have not been approved by the Legislature, but were extended by some agents of the Executive.

During the voting, there was no abstention and ‘nay’ votes on Tuesday, February 25, 2020 — the 13th day sitting of the House of Representatives, when the motion was proffered by Sinoe County District #3 Representative Matthew Zarzar.

But, according to report, copy of which is in possession of the Daily Observer, the Liberia Revenue Authority (LRA) holds an opposing view on the economic soundness of some tax breaks (aimed at stimulating private sector investment), contrary to the National Investment Commission’s (NIC) assertion that all incentives are economically beneficial to the country.

The Specialized Committee said it invited 10 concessions and companies to evaluate their overall performances, include the Liberia Agriculture Company (LAC), Firestone, APM Terminals, Fouta Corporation, Conex Petroleum, Golden Gate Hotel, Fouani Brothers Corporation, BIVAC, Mouson Group, and Sethi Brothers.

According to the Specialized Committee’s report, Mouson group has up to the present refused to honor the committee’s request to submit documents and meet the committee, and that Fouta Corporation has no performance to review because it has just gotten tax breaks.

The Committee stated that it is yet to establish whether Fouani Brothers Corporation and other holders of Incentives are in compliance with the purpose of the tax break offer.

As for Conex Petroleum, the committee indicated that the institution submitted a report with the 15-year concession it has with the Liberian Government to rehabilitate and operate storage terminals, but up to present, Conex Petroleum is yet to give a “list of community projects” as part of its Corporate Social Responsibilities (CSR).

“LAC: while the sub-committee goes through the documents submitted by LAC, it is suspected that the Concession falls short of the parliamentary process to ratification by the Legislature. This situation has been so since the concession was signed in 1959,” the report said.

“That LAC has underutilized the land provided to it under the agreement. In approximately 60 years life span of the Concession, LAC has only utilized 20% of the total land space. This speaks to the lack of capacity of the Company to make use of what she asked the Liberian Government for.”

Grand Bassa County District #4 Representative Vicent Willie said LAC has alleged that the Liberian Government gave 300,000 acres of land to them, of which they are to pay 0.006% annually. He said the acres of lands given are unbelievable and that LAC has not shown that she is currently doing projects in accordance with the antique concession agreement.

The Committee has discovered that APM Terminal is the only Concession in the country that does not have an ‘Expressed Review Clause’ — meaning, there is no clause in the Concession which calls for review or amendment by the Legislature.

The House’s Specialized Committee further indicated that BIVAC’s contract expired on August 30, 2018, and was extended by agents of Executive without input from the Legislature, but the extension maintained essentially everything in the expired contract of BIVAC, including tax breaks.

“Notable in the extended contract was the decision of the Executive that the government should not receive portion of the minimum fees deposited for all imports and exports,” the report said.

Representatives Edwin M. Snowe, Acarous M. Gray, Ivar Jones, Haji Siryon, Moima Briggs-Mensa, and Samuel Kogar separately expressed their discontentment over the “disrespect” exhibited by some agents of the Executive and hailed the committee for the reports.

Montserrado County District #16 Representative Dixon Seboe said: “For too long, the country’s budget has been under US$600 million, but if the government stops giving tax breaks and acts upon a bill to Establish Export Proceeds Repatriation of Liberia 2018, the country’s budget can rise up to over US$800 million.

The Export Proceeds Repatriation of Liberia Act of 2018 seeks to ensure exporters repatriate proceeds from sales of natural resources (iron ore, rubber, timber, gold, diamond, etc) from the sales country within in 90 days.

Accordingly, when the law is passed, it will be the first law ever to mandate exporters to put proceeds from all goods and services including natural resources exported to be repatriated into the local bank accounts of the exporting entity in Liberia.

Author

  • I am a Liberian journalist, born November 7 and hailed from the Southeast and of the kru tribe. I began contributing to the Daily Observer 2008 and was fully employed in 2012. I am the 3rd of eight children and named after my great grandfather. Am happily married with three children (girls). I am a full member of the Press Union of Liberia (PUL) and also the Sports Writers Association of Liberia (SWAL) and the Legislative Press Pool (LEGISPOL). I can be contacted through email: [email protected] or cell number/WhatsApp: (+231) 0886585875 or Facebook.

3 COMMENTS

  1. In this day and age, why should we continue with concessions? Can’t we try something else that will give us at least 50-50 deals? I think it’s possible if you, the leaders, are willing to try something NEW. We are in the 21st CENTURY. Companies take billions out of our country and give us a few million bucks. Wow!! Mount Nimba, Bomi Hills, Bong Mines, etc. can relate enneh? Open your eyes, think BIG!!

  2. Thank God Almighty! I see that we are making sense to some people on this blog.
    To the lawmakers who are reading our comments, bravo! Continue to do so, you may be helping your country greatly.

    However, guys, that’s NOT how to proceed. This is the danger of a circumlocutory house; as soon as we hear people audibly speaking English, we think everything they say is correct or makes sense, and then blindly vote them as lawmakers (oooh my man, that guy is correct. He can speak real book, let’s make him our senator or representative).
    I pray that Liberians would vote seasoned, professional and experienced lawmakers this year and come 2023.
    I personally think your emoluments are well defined, but paid to some wrong people, unfortunately.

    Lawmakers make political decisions in the interest of the country. You should have consulted technical agencies such as the LRA and NIC beforehand to understand the short- and long-term advantages and disadvantages of tax breaks to some businesses before summoning any business entities. Businesses must be at ease with the government. You have aroused fear and curiosity. Protective and contingency measures will be taken by all businesses in Liberia thence. It would not augur well again for the economy.

    Let the LRA and NIC do the job. Whatever recommendations they make to you, abide by it. However, I hope we have the right teams with the required qualifications and patriotic resolve at both agencies.
    If both agencies were doing their jobs right, lawmakers should have little jurisdiction to sit over such case. Let the LRA and NIC do their jobs.

    Liberia is the only country on planet earth that collects ONLY 0.017% of its tax revenues, NOT EVEN 1%.
    Liberia is the ONLY country on planet earth where businesses transact not in the legal tender but in USD on the money and commercial markets.
    Liberia is the ONLY country on planet earth where the government does NOT even know the real annual turnovers of multinationals and how much money are repatriated out of the country without passing through the central banking system!

    Wow, Liberia! A land of liberty in all its meanings. When will it be a country of laws? Surely come 2023, we will collect at least 25% of corporate taxes.

    Liberia will rise again!

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