-Following Pres. Boakai’s Proposal
By Jerromie S. Walters
The House of Representatives(HoR) Committee on Ways, Means & Finance, Judiciary, Public Accounts and Expenditure has been tasked to scrutinize a “A PROPOSAL TO AMEND CHAPTER 10 OF THE LIBERIA REVENUE CODE (LRC)”. The committee is expected to report to plenary on Thursday, April 25, 2024.
The House decision was triggered by a Communication from President Joseph N. Boakai, Sr., for Legislative consideration of the instrument. In his communication read during the 7th Day sitting of the Extraordinary Session of the 55th Legislature, Tuesday, April 23, 2024, President Boakai said the VAT, as proposed, is a neutral tax; broad-based with minimum exemptions; transparent; and, more importantly, encourages voluntary compliance.
“Honorable Speaker, as already intimated, by the adoption of VAT, the Government of Liberia intends to use it as a catalyst for improving Liberia’s tax system in response to the increasing need to improve tax compliance and hence maximize revenue generation for national development. Honorable Speaker, considering the importance of VAT reform in Liberia, we look forward to your continued support to have the VAT law enacted, which will lead to the generation of additional revenue for the Government of Liberia and; hence, reduce the current fiscal gap,” he said.
The Liberian Leader narrated: “In keeping with Section 12, Paragraph 2 of the Public Financial Management Law of Liberia, I am pleased to submit to your honorable office for consideration a proposal to amend Chapter 10 of the Liberia Revenue Code (LRC). The proposed amendment seeks the adoption of value-added tax (VAT) in replacement of the existing goods and services tax (GST) regime. Honorable Speaker, as you may be aware, Liberia is the only ECOWAS member state that has yet to adopt the VAT as required under the ECOWAS regional integration program.”
“In 2009, the Government of Liberia committed, through a memorandum of understanding with the ECOWAS Commission, to adopt VAT. The approval of the proposed VAT law will not only fulfill Liberia’s commitment to the regional fiscal integration program but also help to strengthen our overall tax system. In particular, the VAT adoption will fix the shortcomings of the GST regime thereby enhancing domestic revenue generation. The current GST is a single-staged sales tax with a narrow base with cascading and pyramiding effects. All of these have contributed to the inefficiency of the tax as can be seen in its revenue generation when it is compared to regional counterparts,” he stressed.
President Boakai emphasized that in finalizing this draft law, the Government, through the VAT Technical Working Group, collaborated with and sought inputs from, various stakeholders, including local authorities and development partners. For instance, he said the three engagement dialogues were held with local officials from the counties to solicit their inputs into the draft documents – one in Tubmanburg (for officials from Cape Mount, Gbarpolu, and Bomi), one in Gbarnga (for officials from Nimba, Grand Bassa, Rivercess and Bong) and one in Zwedru (for officials from Maryland, Sinoe, Grand Kru, River Gee, and Grand Gedeh).”
“Also, with support from USAID, the Team held several engagements with government agencies, civil society organizations, members of the business community, and the National Legislature. A special legislative retreat on the VAT implementation was held in Gbarng in 2021; while select members House’s Ways Means and Finance Committee formed part of the VAT implementation study tour to Rwanda in 2022,” he noted.
