By Umaru Fofana
The defeated presidential candidate of the All People’s Congress in the disputed June 2023 polls, Dr Samura Kamara, has decried the tax regime, saying Sierra Leone’s economy “is bad”, with the country at a “high risk of going into stagflation or recession”.
In an exclusive interview with Politico, the former finance minister and central bank Governor said that “nothing is moving, which is not good for the people of this country”.
He added: “I only hope the people in the Ministry of Finance and Development will understand that the way we [have been] going now over the last five years of this government, we’ve had greater emphasis on spending to the extent that we do not now have the resources to support the excessive spending”.
He said that “wherever you cannot match your spending and your revenue base or domestic spending base, is disaster which will lead you to excessive borrowing from the Central Bank and that will in turn lead you to inflation and an erosion of the people’s personal income”.
Dr Samura said that there was “a lot of uncertainties in the economy [and] unless we try to resolve this, it will be difficult. I give an example, when the Central Bank Governor came up with his redenomination policy, I did mention to the people that it was a total distraction from the core problems facing this economy where the local currency was plummeting in value, where taxation was rising”.
He complained about the country’s tax regime saying: “Everything is being taxed now in this country. We are not encouraging small and medium size businesses and where our tax regime is such that it discourages even international investors to come here. These are big challenges, more so where all the government is doing is spending, spending, spending and then the resource base is weak”.
Dr Samura said that if the economy was not growing and was weak, your revenue base was also bound to weaken.
“… if your revenue base is weak, what you must do is not to continue with taxation. You should have a tax regime that encourages productivity, economic recovery” he said, adding that “When the businesses recover and they begin to perform, then you can tax them. But not when they are at the point of dying and collapsing and then all you want is tax, tax, and tax.”
The APC leader said the country’s recent tax policies “are a deterrent to development”.
Here is the rest of the interview:
Dr Samura Kamara:
Even the charges inputting in some of the public services are very high. Take for instance the energy charges have gone up for people who would want to make small businesses using electricity, it will discourage them. We keep raising the prices of petroleum products which triggers hardship, because it triggers an increase in the cost of other services in the economy.
Politico: The Government may argue that the case of the increase in the petroleum prices is beyond their reach – it’s a global trend which they have no control over.
Dr Samura Kamara: I think it has a way to control it. The formula that determines the pump price was brought in by us [the APC] many years ago and this was to liberalize the market. There is something like six variables…Today when I look at the formula for the last time, we had over twenty other variables and these are all charges on the pump price which all bring in increase on the pump price”, Dr Samura said.
So what I will do, you take a look at the pump price formula and examine it. Some of these charges are probably not necessary. Every time you dissolve the formula, it decreases the pump price. The core factors are there, you don’t play with them which are determined by international markets. Like the exchange rate, you can find a way in which occurrences stops depreciating.\
Politico: And what should be done in that regard – because the Leone seems to be plummeting every day?
Dr Samura Kamara: I think there are so many factors as I always say excessive spending and borrowing all of which leads to putting money into people’s hands which is not productive. If you spend on anything that is not productive, you are straining the economy and the currency which is your medium of exchange. There was a time for instance, if you drove from here to Masiaka or Gberre junction, those people that sell to vehicles, you find out that the price indicator, the minimum price has run up. There was a time when we started with Le 100, Le 300 to Le 500 per unit, today if you don’t give Le 2,000 per unit, you won’t get anything at the minimum. So these are just an indication of how prices are really eroding people’s income and by doing so they are eroding even the value of the local currency. It is not a redenomination that will solve the value of your currency. You have to produce and by production, you have to produce domestically, externally and look at you current account which is your import and export account. You have to examine all of these, unless you spend time but you have to accept. As an economic expert of the country, you have to accept the realities on the ground and try to address them.
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