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Sierra Leone

Tax system transparency (SL0024)

Overview

At-a-Glance

Action Plan: Sierra Leone Action Plan 2019-2021

Action Plan Cycle: 2019

Status: Active

Institutions

Lead Institution: Ministry of Finance

Support Institution(s): Parliament, National Revenue Authority, Budget Advocacy Network, Christian Aid, Action Aid, Network Movement for Justice and Development

Policy Areas

Fiscal Transparency, Oversight of Budget/Fiscal Policies, Sustainable Development Goals

IRM Review

IRM Report: Pending IRM Review

Starred: Pending IRM Review

Early Results: Pending IRM Review

Design i

Verifiable: Pending IRM Review

Relevant to OGP Values: Not Relevant

Potential Impact: Pending IRM Review

Implementation i

Completion: Pending IRM Review

Description

What is the public problem that the commitment will address?
Taxes raised from companies and individuals fund
key public services needed to promote the welfare
of the population and reduce poverty. But tax
incentives granted by the government are a major
reason for Sierra Leone’s low tax revenues. The
UN estimates that Least Developed Countries need
to raise at least 20 per cent of their GDP through
taxes to meet the Millennium Development Goals
by 2015. Yet Sierra Leone is way off this target,
currently raising only around 10.9 per cent of GDP
in taxes. The major tax incentives provided by the
government include exemptions on customs duties
and payments of the Goods and Services Tax,
along with reductions in the rate of income tax
payable by corporations, which are being granted
supposedly to attract foreign investment.
In 2012, Sierra Leone lost $224 million dollars
through tax incentives – tax breaks given to
multinational corporations, mostly in the mining
sector. At the time, this equated to 59% of the
entire government budget, and more than eight
times the health budget and seven times the
education budget. Government also grants INGOs,
NGOs and other institutions duty waivers on the
bases that they will contribute in providing services
to the people of Sierra Leone. These waivers are
part of government expenditure to these sectors
and as such the citizen should know who these
waivers are grant to for monitoring purpose.

What is the commitment?
A transparent tax system supports good
governance and the accountability of policy-makers
towards the public. But the granting of special tax
incentives in opaque deals, at the discretion of
individual without public scrutiny, undermines good
governance and can increase the risk of corruption.
In Sierra Leone, parliament and the public lack
information about the tax incentives granted and
are usually not aware of the details until after they
have been agreed, and sometimes not even then.
It is currently impossible for elected parliamentarians, the media and civil society to
scrutinize and debate these deals properly to
ensure that the country optimally benefits.

How will the commitment contribute to solving the public problem?
By enabling accountability for public spending, fiscal
transparency can also reduce fiduciary risks and
improve efficiency and effectiveness of public
spending around tax incentive. Analyses have
shown that countries whose public finances are
more transparent have better fiscal discipline, a
lower perceived level of corruption around the
granting of tax incentive.
It will also increase the Sierra Leone Open Budget
Index score, hence increasing the credibility and
openness of the government at international level.
In addition, CSOs can also use the published
information to hold government and the institutions
granted the tax incentive accountable on how they
use the incentive.

Why is this commitment relevant to OGP values?
Access to information: Citizen will have access to tax incentive information
Public accountability: Government will account
for all tax incentives granted. Citizen will also use
the published information to hold government
accountable

Additional Information:
This commitment is also linked to the Sierra Leone
National Development Plan under the following
section:
2.5.1 Fiscal Policy medium-term measures –
Rationalizing tax and duty waivers
8.8 Potential areas for resource mobilization to
finance the MTNDP – Publish tax expenditure
Reporting- Publish estimates of revenue foregone
through each individual tax exemption scheme;
periodically review the costs and benefits of each
scheme with respect to the objectives of the
MTNDP.
It is also linked to the SDG 16 and the target below:
 16.6 Develop effective, accountable and
transparent institutions at all levels
 16.10 Ensure public access to information
and protect fundamental freedoms in
accordance with national legislation and
international agreements


Commitments

  1. Expanding community-based justice services

    SL0022, 2019, Justice

  2. Improving access to secondary school

    SL0023, 2019, Education

  3. Tax system transparency

    SL0024, 2019, Fiscal Transparency

  4. Beneficial ownership registry

    SL0025, 2019, Beneficial Ownership

  5. Improve implementation of right to access to information

    SL0026, 2019, E-Government

  6. Advancing gender equality

    SL0027, 2019, Gender

  7. Open parliament

    SL0028, 2019, Capacity Building

  8. Records and Archives Management

    SL0029, 2019, Legislation & Regulation

  9. Gender

    SL0012, 2016, Capacity Building

  10. Foriegn Aid Transparency

    SL0013, 2016, Aid

  11. Waste Management

    SL0014, 2016, Capacity Building

  12. Fiscal Transparency and Open Budget

    SL0015, 2016, E-Government

  13. Audit Report

    SL0016, 2016, Audits and Controls

  14. Climate Change

    SL0017, 2016, Capacity Building

  15. Elections

    SL0018, 2016, E-Government

  16. Record Archive Management

    SL0019, 2016, E-Government

  17. Access to Justice

    SL0020, 2016, Capacity Building

  18. Open Public Procurement Contracting

    SL0021, 2016, Anti-Corruption Institutions

  19. Publish and Revise 70% of Mining and Agricultural Lease Agreements and Contracts

    SL0009, 2014, E-Government

  20. Starred commitment Right to Access Information Law

    SL0010, 2014, Capacity Building

  21. Open Data Portal for Transparency in Fiscal and Extractive Transactions

    SL0011, 2014, E-Government

  22. Public Integrity Pact with 5 Ministries, Departments, and Agencies

    SL0001, 2014, Conflicts of Interest

  23. Archives and Records Management Act

    SL0002, 2014, E-Government

  24. Scale up Performance Management and Service Delivery Directorate

    SL0003, 2014, Public Participation

  25. Compliance with Audit Measures

    SL0004, 2014, Audits and Controls

  26. Starred commitment Single Treasure Account

    SL0005, 2014, Extractive Industries

  27. Extractive Industry Revenue Act

    SL0006, 2014, Extractive Industries

  28. Scaling up Extractive Industry Transparency Initiatives

    SL0007, 2014, Extractive Industries

  29. Local Content Policy (LCP) Linkages with MDAs

    SL0008, 2014, Capacity Building