The Liberia Revenue Authority (LRA), the revenue generating arm of the Liberian Government, may not find it smooth in performing its task during this period of collecting taxes as the Coronavirus disease rages and claims lives around the world.
Although cases of the disease are fewer in Liberia and pose not much threat as compared to the United States, Italy and Spain, the preventive measures employed by the Health Ministry in line with the World Health Organization (WHO), one of which is lock-down that affects movements at bordering points, has the propensity to impede revenue generation.
Movements across borders facilitate trade and Customs is able to collect revenues, but with the restriction, it is certain that cross-border trade will decline, thus affecting revenue generation.
LRA Communications Director, D. Kaihenneh Segbe said: “When borders are opened and trading activities are active, we are able to generate revenue from Customs at the various points of entry, but with the prevailing situation we cannot be sure that things will happen as it should be.”
According to Segbe, as a result of the restriction at various bordering points due to the health emergency goods will not flow into the country as it was before; which adversely impact the collection capacity of Customs.
Bordering points from where Customs collects huge revenue besides the Freeport of Monrovia and the Roberts International Airport are the Ganta Port of Entry and Loguatuo both in Nimba County, Maryland entry point between Liberia and the Ivory Coast, Bo Waterside between Liberia and Sierra Leone in Grand Cape Mount, and Yuula in Bong County between Liberia and Guinea.
In 2016 the LRA recorded the Ganta point of entry and Loguatuo as the highest contributors to revenue envelop for that fiscal year, and in the 2018/2019 Fiscal Year others from the southeastern Liberia added to the previous to increase the size of the envelop.
There is no doubt, however, that Ganta and Loguatuo points of entry continue to play a vital role in revenue generation at Customs in Liberia, and that the current health emergency restricting movements will strangulate revenue that must come to government as businesspeople for health reason and government’s mandate will slow down their activities.
Also, collecting taxes from businesspeople is reliant on the income of the business, and if income drops below the tax margin, the business cannot pay what it does not earn in consonance with the tax rate.
“You may see businesses operating, but they are not earning income that will match the taxes that they need to pay, and if they don’t, LRA cannot get the taxes that the businesses should pay,” said an LRA employee who asked to remain anonymous.
Meanwhile, the negative consequence of the COVID-19 on revenue generation is not only unique to Liberia but the rest of Africa as borders are tightened and people’s movements restricted.
Africa’s tax monitoring watchdog, the African Tax Administration Forum (ATAF), says while the negative impact of COVID-19 will be the case throughout the world, it is of particular concern to countries in Africa.
“Most countries on the continent have very narrow tax bases across all of the three major tax types: personal income tax, corporate income tax, and value-added tax. Particularly disturbing is the extent to which African tax administrations are dependent on a small portion of taxpayers for their total revenues,” said ATAF release.