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2017 budget: No tax exemption for NGOs, fuel price shoots up

November 14, 2016 By Regina Pratt

As Minister of Finance and Economic Development, Momodu Kargbo, read the 2017 budget in Parliament last Friday, 11 November, it emerged that the government has finally removed duty free concession to non-governmental organisations operating in the country, while pump  price  per litre jumps from Le3, 750 to Le 6000.

The government had prepared the stage for an increase in the price of fuel, arguing that it was losing billions of Leones subsidising petroleum products.

An International Monetary Fund (IMF) mission, led by John Wakeman-Linn, had advised the government to implement several monetary and fiscal policies, including the removal of fuel subsidy, which they maintained was not benefiting ordinary Sierra Leoneans.

 “Fiscal policy should focus on increasing revenues, while raising the efficiency and quality of public spending. This would increase the fiscal space for pro-poor social expenditure. In particular, the practice of keeping the price of retail fuel constant by reducing the excise on retail fuel whenever oil prices rise or the exchange rate depreciates is no longer sustainable since the excise on retail fuel has now reached zero. The mission therefore recommended that the government should now take steps to adjust retail fuel prices as needed to ensure that this does not become an increasing burden on the budget,” John Wakeman-Linn told journalists in Freetown.

He also said that for the country’s economy to grow, government should broaden its tax rate by reducing exemption in certain areas, especially for non-governmental organisations.

“We generally do not support tax exemption and the government should broaden its tax rate to enhance economic growth,” he recommended.

While presenting the Appropriation Bill 2017, themed “Recovery through Economic Diversification Fostering Entrepreneurship”, Minister Kargbo told lawmakers that government has taken a decision to discontinue subsidising fuel products, while also removing all tax exemptions for non-governmental organisations operating the country.

“The local price for fuel will continue to increase despite the low rate in the world market because the price is rated in dollars. Big companies do buy in bulk rather than buying from the commercial pump prices,” he said.

Just a few hours after the Minister’s statement, the Petroleum Regulatory Agency issued a release, announcing the increase in the pump prices of petroleum products from Le3, 750 to Le6, 000 and fuel oil from le3, 151.94 to Le5000.

The release also stated that the Petroleum Regulatory Agency would continue to perform its statutory functions of fortnightly reviewing the prices of petroleum products.

Prior to the increase in the prices of petroleum products, the Ministry of Information and Communications undertook nationwide ‘consultations’ on the need to remove fuel subsidy. Minister of Information and Communications, Mohamed Bangura, had told the public that government was losing billions of Leones to fuel subsidy and that some unscrupulous people were taking advantage of the low prices to smuggle petroleum products to neighbouring countries.

A Police crackdown disclosed that smuggling was rife in Kambia district, which then had 42 fuel stations, which were allegedly used as conduit to smuggle fuel out of Sierra Leone. Three tankers of fuel that were allegedly heading to neighbouring Guinea were arrested by the police after a swift raid.

However, the Guinean Ambassador in Sierra Leone, last week told a Freetown-based radio station that cross border trade, and not smuggling, was going on between the two countries. He said authorities in the sub-region should meet and harmonise the pump price in their respective countries in a bid to address the issue.

Both the Mano River Union and Economic Community of West African States emphasise the free movement of goods and persons across borders.

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