Tax Reductions “More poor” than Pro-poor?

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Since President George Weah mandated the Liberia Revenue Authority (LRA) to within three days take steps to reduce tariffs on basic imported commodities, public euphoria spiked with gross expectations that prices on commodities such as rice, petroleum products and building materials were going to drop immediately.

Those commodities are easily the most consumed, especially “rice” which is a basic staple, eaten in nearly every household in Liberia. While some welcomed President Weah’s ultimatum to the LRA, claiming that it speaks to the success of the Pro-Poor agenda, others saw it as a disservice to the masses because the outcome of this decision appears unlikely to directly and positively impact the poor.

Following the expiration of the three-day ultimatum, a major headline appearing in some newspapers including the Daily Observer, read “President Weah Approves Big Tax Reduction.” The headlines inspired a rush for the local dailies by eager readers who have been following developments almost by the minute. Fixed in the mistaken belief that prices would have come tumbling down almost immediately in the wake of President Weah’s ultimatum, many remained glued to their radios desperately trying to keep abreast of price drops of various commodities especially their beloved rice.

Disappointingly, commodities ranking high on the wish list of most Liberians were not mentioned in the price reductions. Instead, the list included commodities like pig feet reduced by 81%, chicken feet reduced by 63%, vegetables reduced by 41%, onions 53%, used clothes 41% and mosquito coil 65%. The mentioned items are said to be among 2000 commodities on which taxes are expected to be reduced but because the list featured commodities far down the wish list, an air of dejection appeared to have enveloped the nation.

A woman disembarking a vehicle on 12th Street in Sinkor asked, “I thought they say the President reduced prices. Was transportation not a part?” She had left the ELWA Junction hoping to pay at most L$60.00 instead of L$80.00. The driver of the taxi responded, “Mum, read the newspaper. There is nothing — no reduction on fuel and gasoline, and so transportation fare remains the same.” Many supporters of the Pro-poor Agenda were apparently caught flat-footed and could say little in defense of unfolding developments except to shrug off criticisms with dubious self-assuring expressions of “it is still soon and the government needs to adjust.

But others saw it otherwise and mocked the tax reduction and described it as “More poor” than Pro-poor. Public reactions to the tax reduction ultimatum simply brought to the fore what Liberians actually considered as commodities on which prices ought to be reduced. Rice, though not produced in commercial quantities, has remained through time our major staple and it has become a political commodity with the potential to trigger social unrest including riots.

With rice at an affordable price, the poorest of the poor can always remain somehow assured of at least a meal daily. Against pressing needs for food and shelter, many actually care little whether the price of a mosquito coil goes up or come down. As it appears, many Liberians, both poor and rich, are losing interest in imported meat including chicken and pig products.

What real and beneficial impact will tax reductions on these commodities bring to the poor? From the background of experience we wish to advise the President to properly liaise with his technocrats and the Legislature to properly arrange and identify those commodities on which taxes can be reduced to fully benefit the masses.

Authors

3 COMMENTS

  1. I hope the President is being smart about reduction in taxes on items that directly impact the poor. For example just the fuel tax, when it is reduced it will affect the price of every item because the cost of transportation will reduce significantly.
    However, a reduction in taxes on the importation of chicken feet and pig feet, will allow unscrupulous foreign businesses to overwhelm the local market with cheap imports to the extent that local farmers in chicken and pig husbandry will be put out of business. To make matter worse, what is imported is the least grade farm product if not expired products.

    Another area to reduce taxes is the small containers that are used by many Liberians when importing merchandise from the USA. I mean the gov’t strategy must be strategic to directly benefit Liberians then to generally reduce taxes that would empower the very foreign investors ( are they foreign investors or hustlers). I am afraid that foreign investors have now been given the power to overwhelm local production and put them out of business.

    I beg that the gov’t be strategic and ‘pick and choose’ jealously those commodities that will truly impact the Liberian people and not generally impose a tax holiday that will be used to dump low grade products on the Liberian market and put our domestic industries (especially animal husbandry) out of business.

    Please think it over. The idea is good but must be strategic.

  2. “Daily Observer” has been on top of the issues for 36 years, and my friend Mr. H.T Stewart is among the most informed of the slippery slope Liberia haltingly climbing: Present a price reduction proposal, bra.

  3. “Instead, the list included commodities like pig feet reduced by 81%, chicken feet reduced by 63%, vegetables reduced by 41%, onions 53%, used clothes 41% and mosquito coil 65%.” Webmaster Admin.

    So if this is true, what were the prices of these commodities before they dropped? If pig feet sold for LD $50 a piece, then it is now LD $9.50 which shows 81% price drop? Too much taxes or too much profit. 🙁

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