Simeon Freeman Advances Strategies for COVID-19 Recovery Plan

Mr. Freeman: "We must develop a strong tax structure and make government a place for service."

— As Minister Samora Wolokollie underscores impacts of pandemic on economy

While the Coronavirus pandemic has come and Liberia is facing the economic consequences coming with, Liberian businessman and politician, Simeon Freeman, has suggested some ways of recovery to the George Weah Administration for consideration.

Sharing his thoughts at the Edward Wilmot Blyden Intellectual Forum of the Press Union of Liberia on Monday, June 29, Mr. Freeman, while recognizing the efforts of government in fighting the disease, warned firstly that the country needs to reconsider the current approaches to devise another one that will quickly abolish the virus because it is gravely affecting the banking sector.  “If this continues and the public loses confidence for the next four months in the banking sector experiencing liquidity, the entire sector will collapse,” Mr. Freeman warned.

According to the Economics expert, instead of people depositing money in the bank now, they are withdrawing leaving the bank empty; a situation he says will cost the government and the entire country.

To mitigate this in terms of the COVID-19 fight, Mr. Freeman said the health authorities with the government should move away from the “lockdown” of the whole country and select districts one at a time to have them locked down for education and mass testing to know whether or not Liberia’s low rate of infection is really the reality on ground.

With the restriction in traveling and how gravely the virus is affecting other people around the world, Mr. Freeman said even opening the airport will not bring the needed revenue to the country because not many will travel as the tourism sector has become inactive.  He added that the pandemic is a lesson to teach Liberians how to diversify their economy to graduate from import dependency to production, citing, “See China and Vietnam; imported goods and rice from there cannot be much now because they want it themselves, and we who depend on these imported goods are short of them.”

Deputy Minister for Fiscal Affairs at the Ministry of Finance and Development Planning, Dr. Samora P.Z. Wolokollie

Concurring with Freeman, Deputy Minister for Fiscal Affairs at the Ministry of Finance and Development Planning, Dr. Samora P.Z. Wolokollie, stressed that Liberia is an import-based economy that the COVID-19 is impacting gravely.

On the fiscal highlight of the country, Deputy Minister Wolokollie said: “Prior to the outbreak of COVID-19, domestic revenue was projected at US$444 million out of a total of US$505 million of which US$61 million was attributed to external resources. This projection was consistent with the recast budget that was passed into law in January 2020. Major lines informing the domestic resource envelope included taxes on income and profit, international trade, goods and services tax, administrative fees, etc.”

Minister Wolokollie admitted that the economy has turned bad, but justified that, “While the Liberia Revenue Authority was taking proactive measures to ensure that lawful revenues were collected to support the national developmental agenda of the government, the tentacles of the deadly Coronavirus arrived on the shores of Liberia. With the outbreak of COVID-19 came the declaration of a State of Emergency by H.E. the President. As a mitigating factor, the SOE sanctioned social distancing, reduced workforce, reduced hours for economic activities, and a limited curfew. All these measures combined resulted in a precipitous drop in viable economic activities. Considering the fact that the COVID-19 preventive measures inclusive of social distancing will slow down economic activities and lead to low revenue generation, the Government of Liberia, supported by the IMF initiated another recast, known as the COVID Recast. This recast was necessary to adjust prior projections taking into account the prevailing situation. Toward that end, the COVID recast was submitted and enacted into law with a decrease to domestic revenue (from US$444 million to US$395 million).”

Mr. Freeman, furthering his observation and suggestions on the economic matter, took an exception to the surcharging strategy the government has contemplated on introducing in recent days for GSM companies, which he said is not the right approach because if costs of data and calls are increased, demand for the commodities will surely drop.  Giving an example, Freeman said: “If you were buying a gallon of gasoline for $5.00 and with the $5.00 you used to buy 15 gallons, and it is later increased to $10.00, the consumer will adjust to purchase one or two gallons instead of 15.  Similarly, he said heavy charges on calls and data will only reduce consumers’ demands and they will devise other strategies for communication.

Furthermore, he said the GSM companies and the government will be losing in revenue generation and the same economic decline will persist.

He said the GSM company can liaise with the government to develop an app that will be able to trace people who may not be paying taxes to get them comply with their civil obligation.  “If you have 2,000 people not paying tax, for instance, you can get to the GSM companies to fast track them through subscribers’ information and they can be traced later to pay taxes,” Mr. Freeman said.

Mr. Freeman also observes that the government was losing in real estate tax revenue because of poor tax structure coming with poor infrastructures. He indicated that the Liberian infrastructure is such that a rich person wanting to have a good house will have no option but to build in a locality where zinc shacks are surrounding the neighborhood with no road connectivity and, while tax collectors are in the process of collecting taxes, they have to pass by those valueless structures to get to the house that should pay tax.

“If for instance you have the Paynesville ELWA area laid out well that vehicles can take people to their homes, you can develop a tax structure that if people were paying US$100 for real estate, they can now pay US$200 and, by developing this area, only people who have the potential to have the real property for this tax will live there, and government will generate revenue in that direction,” said Freeman.

He said, “We celebrate Ghana, Nigeria and other places in the region, and what those countries did was they structured their taxes in such a way that they would generate the needed revenue, and for the airport vicinity in Ghana, not just anyone can live there because of the tax structure and the kind of infrastructure that should be there,” he added.

Another strategy of the government but prior to the COVID-19 is “Salary harmonization,” an approach Mr. Freeman rejected sternly with an emphasis: “I don’t support salary harmonization.” He said wastage from recurrent expense has been experienced from the days of Charles Taylor when US$28.8 million went to salaries out of US$32 million national budget, and US$206 million going to allowances for experts and others of interest to former President Sirleaf.

Lowering salaries for public servants in this way, according to Mr. Freeman leaves grief in the people; however, he said, saving about US$70 million for investment in the private sector would help because as the private sector boosts, people will leave to go there and the fabulous salaries anticipated to be made in government will not be made in that sector.  He said when government is presented as a place for service, people who are desirous of rendering services will avail themselves to work instead of people who want to build wealth.

For collection from vehicle registration, the Liberian businessman said, police officers and agents of Ministry of Transport do not have to inspect throughout the year, but an app can also be developed to scan every car that passes by to ensure that it is registered or has a license instead of causing traffic congestion every time which, according to him, causes setbacks for the same taxpayers too.


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