Late last year, Boima Kamara, Minister of Finance and Development Planning (MFDP) admitted on a local radio talk show that the country has plunged into recession. He noted the weakness and undervalue of the Liberian dollar, high prices of basic local commodities and the drop in international trade as upshot of the collapse. However, he was optimistic that policies and strategies being devised by his Ministry and relevant agencies would obviously change the course. I believed him!
While I emphasize the dirge of Liberians currently facing increase in taxes on commodities such as water, alcoholic beverages, etc., as part of government’s tactics to mitigate the economic down trend, let me opine that these policy measures are genuinely intended to stabilize the Liberian economy. When customs and international trade are challenged by geo-economic, technological, social and political factors, domestic taxation is the way to go. This is why I think the Liberia Revenue Authority (LRA) should expand its tax horizon and revenue scouting into other sectors, Power and Electricity for instance.
After 26 years of darkness, Liberia cut the ribbon of a revitalized Hydro Dam in Mount Coffee, Montserrado County on December 15, 2016. Speaking on behalf of the Liberian government, Minister of Information, Culture and Tourism (MICAT) Eugene Nagbe, expounded that the refurbished Hydro Plant was a fulfillment of President Ellen Johnson Sirleaf’s commitment to Liberia’s development agenda festooned in her campaign promises of 2005 and 2011.
Though some say the “Small Light Today Big Light Tomorrow” realization is tardy, many Liberians are gleeful but cautiously hopeful or perhaps cynical that power generated from ‘the Hydro’ will be aptly managed by the Liberia Electricity Corporation (LEC). This is so because of their past problematic experiences with the LEC. But the LEC quagmire will be left for another day!
As a consequence of the weedy institutionalized, ineptly regulated and unethically distributed power supply across Liberia, ordinary Liberians with capital have since engaged in private power and electricity sales. What is quite captivating is that these transactions are typically illegal.
Contrary to Liberia’s revenue regime which requires that a 10% tax is levied on payment for the acquisition of an investment asset in Liberia, these private citizens purchase huge generators in their communities, supplying neighbors with electricity or what has come to be known as “Community Current” at costs often ranging from US$ 40 to US$ 50 per ampere. Goods and Services Tax (GST) is habitually unpaid in these instances thus contravening provisions of the Revenue Code of Liberia which further requires that Service Tax payable on a supply of taxable services is to be accounted for by the registered service provider making the supply. While the code says, “registered service providers,” most of the “community current” providers are not registered.
Low grade electrical appliances and cheap wires bought from local vendors are often stretched from one generator house to the other, mostly across homes in densely populated communities and are usually installed by unlicensed, unprofessional and unsophisticated individuals. The hazards associated with these illegal practices are usually unheeded due to ‘necessity’ or ‘love’ for electricity. Besides, it has become a generally accepted Liberian reality that for many years, LEC power supply has not reached ordinary communities. So why waste time waiting anyway?
Arguably, millions and thousands of United States and Liberian dollars are generated annually by these illegal, unregistered and unregulated power and electricity suppliers with no regards to relevant government institutions such as the Liberia Business Registry (LBR), LRA and LEC.
This begs the question. Does anybody seriously think or believe that private citizens who are involved in power sales in different communities in Monrovia or Liberia at large pay taxes to the Liberian government?
Since the generators owned by these private citizens are solely for economic purposes evident by the sale of power in communities, it is required by the laws of Liberia that such individuals duly register those equipment with the LBR as legal businesses and obtain Tax Payer Identification Numbers (TIN) from the LRA so as to place them into the tax net and enable them pay their fair share of taxes. LEC should devise ways, means and strategies to regulate these power and electricity suppliers.
It is high time LBR, LEC and LRA team up with the view to derive a Memorandum of Understanding (MoU) that will regulate private citizens supplying power and electricity, as well as enforce compliance with relevant commerce and tax laws that will see them pay their fair share of taxes.
This could be a wet spot for domestic revenue generation that would aid in soothing our crumbling economy and also serve as a measure to avert the potential undermining of our revitalized Hydro. Or there will be no day that some Liberians will see light, whether big or small!