Assistant Commissioner of Operation, Customs Department at the National Revenue Authority (NRA) yesterday lamented that government was losing significant revenue in the current petroleum pricing mechanism, thus undermining domestic revenue mobilisation in the face of increased demand on public expenditure to support many programmes.
Speaking during a pre-legislative session on the proposed Finance Act 2016, Abu Bakarr Kamara said that analysis submitted by the Petroleum Regulator Agency points at government losing Le150.81 billion in 2014 and Le133.35 billion in 2015.
“If such monies were spent on health, education, agriculture and the infrastructure sectors a lot would have been attained by now,” he said.
“It is important to note that the haves, including established private businesses, can afford cars, heavy duty machines and generators consume far more fuel than the poor.
“Therefore the benefits of these lost revenues in artificial lowered oil price largely benefit those who can afford as opposed to the majority poor households. There are ample evidences that support the view that fuel subsidy benefits the rich far more than the poor.”
He told lawmakers that the argument that reduction in fuel prices could trigger lower transport fares seems untenable.
“Reduction in fuel prices is not always naturally reflected in lower transport fares. A typical case in point is the reduction of the pump price of fuel from Le4,500 to Le3,750 at the end of January last year, which never translated to lower transport fares,” explained Kamara.
Commissioner Kamara further explained that evidence abounds that petroleum product prices are far lower in Sierra Leone than in neighbouring countries like Guinea, Liberia and Ghana.
“For instance, the equivalent price of a liter of petrol in Guinea and Liberia is Le5,280 and Le4,660 respectively, compared to Le3,750 in Sierra Leone. Similarly, despite being an oil producing country and equally confronted with similar fiscal challenges, the cost of liter petrol in Ghana is about Le5,281,” he said.
He urged government to consider harmonising the current retail pricing formula of fuel to that of commercial as such action could provide additional fiscal space to be invested.
“On the issue of the increase in PAYE marginal tax increment from 30 to 35 percent, the five percent increase will only affect monthly salary above the Le2 million thresholds. It should be observed that with the new tax band adjustment to reflect economic realities, most people are not worse off by this new requirement,” he said.
In her contribution, Hon. Rosaline J.K. Smith of the All People’s Congress said 35% increment was too high, adding that the NRA does not give tax returns despite the fact that some of them contribute greatly in their communities and constituencies.
Hon. Foday Rado Yokie of the opposition Sierra Leone People’s Party said that as an economist, it was bad for government to subsidise fuel prices as the mining sector uses more fuel than ordinary citizens, thus submitting that the revenue authority should not compare pump price in neighbouring countries as most of those countries earn more than what Sierra Leoneans are earning.
“We are losing a lot of money which could be used in other important sectors. The 35% is only on paper as it is not positively impacting on the lives of Sierra Leoneans. You should be sincere in the imposition of taxes as we should be at the majority of the earning. I prefer you maintain the 30% instead of the 35%. MPs should have zero taxation rather than the importers,” he said.