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Monday, October 2, 2023

Exorbitant taxes are killing our businesses: GRA has nothing to celebrate


Dear editor,

The Gambia’s economy remains unstable in the post Covid-19 era and the government has not shown any strategic recovery plan to achieve stability and growth.

All the macroeconomic indicators have proven beyond doubt that the country is battling with retarded growth without much consideration from our authorities to tackle the menace in achieving our long-term goal of attaining equitable distribution of national wealth.

Of recent, the country’s policymakers have shied away from formulating progressive economic policies only to satisfy the interest of one who wants to retain power and political capital. The Ministry of Finance which is also entrusted with our economy for sustainable and accelerated growth has continued to give huge collection targets to Gambia Revenue Authority which yearly increases its taxes to meet the said target at the detriment of businesses, especially importers.

All what our authorities are interested in are funds for roads infrastructure forgetting that infrastructural development is not a clear cut case to attain stability and growth. What’s road infrastructure for when your economic overturn is low and the productive sectors like Agriculture are down sloping for lack of equipment and fertilizer? With such a trend of economic management, in a billion years we will not achieve stabilized economy; talk-less of a budget surplus.

The current inflationary pressure is attributed to lack of space at the ports for cargoes to timely dock to avoid huge demurrage payments but how about the exorbitant taxes that awaits importers? It’s obvious, the high taxes imposed on business owners are always passed to consumers to achieve profit because no businessman will trade at a loss. A country struggling to keep its legal tender at stable rates and faced with a competition from its neighbor should not be found wanting in yearly increment of taxes; rather, it should cut its taxes to attract businesses.

The exorbitant taxes and delays businessmen suffer contributed to the decision of importing goods on transits instead of direct importation because that is said to be cheaper and faster.

Last year, GRA were tasked to collect D12 billion but they could not meet the target due to certain situations. Instead of reviewing the exorbitant tariffs charged at the ports, the Finance ministry increased their target to D15 billion this year without given due consideration to the bottlenecks at our ports.

Blaming every situation on Covid and Russian invasion in Ukraine have been the order of the day but why are we not creating social protection  for the masses against inflation instead of exploiting them through exorbitant taxation? If our policy makers were interested in the welfare of the masses during such a major crisis, they will cut tax to foster economic growth .

During crises, governments are expected to lower tax

rates for people to have more disposable income to spend. This In return will help the economy to navigate out of the financial crisis sooner.

Thus, varying the tax rate in line with the present economic condition especially in a country that is faced with stagflation can be a great way to ensure economy stability with high chances of overcoming the situation at a faster pace.

With high taxes, there is risk for politicians to act opportunistically and state revenue being spent in an ineffective manner. If all these undesirable situations are not addressed, there is no point pontificating about collection of billions because there is no prospect of it leading us to economic stability. The exorbitant taxes imposed on businessmen will further result to lower profits and people will have less money to spend on goods and services. It further affects demand, sales revenue and risks collapsing business and development.

In his view on public policy, Friedman said: “Policies have unintended consequences, so economists should focus on results, not intention”. In light of this, the continuous increment of tax is unsustainable and dangerous to the survival of business in the country; so, GRA and the government should rethink their policy decision on tax.

Ebrima Jarra

MSC in economics (student)

Aljamdou Village

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