The business community in Sierra Leone is at great loggerheads with the National Revenue Authority and the Ministry of Trade and Industry over the Goods and Services Tax levied on them in recent days as well as the application of the Electronic Cash Transfer machines, which has added salt to injury to their perceived predicament.
To demonstrate how frustrated they are as regards the new taxation scheme, they have decided to shut down their shops – in other words down tools – to avoid their businesses from crashing and burning. They have threatened to keep the situation at that level for a week, and if no amicable solution is found, they are prepared to move from that level to a higher level, although we cannot tell whether it is straight to level 3 or they may tarry at level 2.5. In any case they said they are determined to close their shops for as long as it takes to get the impasse in business transactions in the country resolved.
But what is the real thorn in the flesh of this matter that has caused the government’s GST scheme this time around to backfire in this detrimental manner?
Placing our ears on the ground, we have come to understand that the challenging issue bedeviling the supposed fine taxation of the GST scheme is the threshold set for businesses that should pay the Goods and Services Tax (GST) and utilize the ECR – Electronic Cash Transfer – Machines, which have been placed in the shops of businesses that fall within the threshold of Le100, 000,000 in capital.
In 2010, around when the GST was introduced in Sierra Leone by the Ernest Bai Koroma-led APC government, the threshold set for businesses that should pay the Tax was Three Hundred and Fifty Million Leones (Le350,000,000), which targeted only giant importers in the business industry of the country. Hence all businesses, whose resources or capital were under the above-mentioned threshold were exempt from paying the GST and were obliged to pay the flat rate tax.
However, under the current government, the threshold for paying GST has been lowered to One Hundred Million Leones (Le100, 000,000), in order to broaden the tax base, according to the government’s Ministry of Trade and Industry and the National Revenue Authority (NRA). This means more smaller and middle-level businesses have been caught in the tax or GST net of the government. And to enforce payment of the GST, the government authorities have provided and installed machines in the shops of such businesses to ensure the tax is collected by all means using proof of receipt from the shop or business owners. On the other hand, the business owners are saying that the whole scheme is unfavourable to the profit-making or profitable turnover of their businesses hence would not budge to accepting the scheme, citing many other factors that are impeding the smooth flow of the GST.
But the public is of the view that the GST is a surcharge on prices, which means the actual people incurring the tax are the consumers, not the businesses themselves.
Hence, the whole affair is like the more we look the less we see the actual contending issues in this tax collection scheme that seems to be backfiring in the hands of the Ministry of Trade and the National Revenue Authority.
The affected business people have continued to complain and call for an adjustment of the GST scheme in order for all to attain a win-win situation.
Speaking over the air recently in the wake of the protest shutdown of business shops in Freetown, the Sierra Leone Importers Association’s Secretary General Rashid A. Conteh says: “Our main concern is that the threshold has been brought down to One Hundred Million Leones (Le100,000,000), which is serious affecting small businesses in the country. These businesses are making less profit and are finding it very difficult to pay GST coupled with the challenges of paying rent for their business places and meeting their family welfare. Furthermore, while they try to sell their goods at prices a little bit higher in order to raise the GST, they continue to lose sales to traders who sell the same goods on the roadside or streets at prices less than theirs because they are not obliged to pay GST. So the shop owners lose sales or choose to sell at a loss, and no one wants to go into business to make a loss all the time.”
Mr Conteh said that giant importers or businesses can afford to pay GST because they could raise the tax through surcharge prices, but smaller business people who put together finances or little capital to import a container of mixed items or assorted goods could not afford to meet the condition of paying the tax seemingly for the second time from their shops after they would have paid it at the initial arrival of the container at the port. He cited other issues such as the mechanical hitches or faults with the machines, as well as its usage, being experienced by the shop or business owners.
However the Director General of NRA begs to differ. He contends that the threshold is tagged at Le100, 000,000 to broaden the tax base, which all the shop or business owners in the GST scheme fall within. He says the business or shop owners are just not honest and some are dishonestly sharing the wrong information and intention surrounding the application of the GST and the ECR.
Both personalities, nevertheless call for more dialogue to solve the sticking issue that has bought about the closure of shops by the business community in the country.
In any case, it will be wise for both parties to amicably resolve the matter and allow business to flow in the country as usual and even much more. This is because the effects of such an ugly situation are seriously detrimental to the economic growth of the nation. Such an impasse in the flow of business in the country will adversely affect not only the government in its efforts at financing national developments, but also the country’s productivity or gross domestic product (GDP). The feud will also continue to impact negatively on the prices of the few goods and services that are in the market for public consumption.
Furthermore, jobs will be lost by many people in the country and a lot of workers would go without salaries and wages as business owners continue to suffer loss of income and revenue in their protest shutdown of business shops. In the end all are losers and none will bear the brunt of the blame for the shortfall and downfall of the economy other than the government of the day. So let’s see reasons and get the wheels of business and the engine of the economy up and running. In other words, let’s offer some sacrifices from both the business community and the government to resolve the matter and move this country forward. We have suffered for far too long over the years, especially in the last four or so years for various causative factors or reasons, which are matters of discourse for other days.
In this Government-business community misfortune, a sage advice of our African people that Forum newspaper would like to state is that “no shortcuts exist to the top of a palm tree”. So let both parties in the quarrel surrounding the GST discuss honestly and reason with each other to ensure that the nation does not suffer or perish.
