Dear Editor,
The Gambia Revenue Authority (GRA), mandated to mobilise revenue for national development, has undertaken extensive reforms in tax administration in recent years.
While these reforms have significantly improved government revenue performance with the GRA consistently meeting and even exceeding its targets since the advent of the Barrow administration, the burden of these policies has fallen disproportionately on Small and Medium Enterprises (SMEs), particularly water producers, as well as on consumers.
Taxation is widely recognised as a civic responsibility and a vital mechanism for financing public development. However, from an economic perspective, an effective tax system must strike a balance between revenue generation and economic efficiency. When the costs imposed by tax reforms outweigh their developmental benefits especially for productive sectors such policies risk undermining growth, employment, and long-term sustainability.
Despite the commendable increase in revenue collection, the GRA’s approach raises serious concerns among many observers, including the author. Current tax administration practices suggest that revenue growth has not been driven solely by efficiency gains through modernisation and improved compliance, but also by repeated increases in container clearance fees and indirect production costs. A meaningful tax reform should ideally raise revenue without escalating administrative and operational burdens on businesses. When clearance fees continue to rise, it indicates that revenue gains are being achieved through cost transfer rather than efficiency.
The introduction of the SICPA sticker system has further intensified these challenges for water producers. The sticker requirement has significantly increased operational costs and constrained production capacity. Producers are now required to pay for stickers prior to production, creating liquidity pressures and causing production delays. This has resulted in lower output levels, extended production timelines, and heightened risks to business sustainability.
From an economic standpoint, this situation aligns primarily with Cost-Push Inflation Theory and Production Constraint Theory.
Cost-push inflation occurs when rising input costs such as taxes, compliance fees, and regulatory requirements force producers to reduce output or increase prices. In the case of water producers, higher sticker costs, delays in sticker availability, and increased labor requirements for labeling have raised marginal production costs. As a result, producers are unable to operate at optimal capacity, and consumers ultimately face higher prices.
Additionally, the reforms represent a negative supply-side shock, where regulatory inefficiencies disrupt the value chain from producer to retailer to consumer. It is widely believed that sticker costs now exceed container clearance fees, while delays and shortages in sticker supply have significantly slowed production. Containers of raw materials that previously sustained production for six weeks are now stretched over three to four months due to reduced output an experience shared by most producers in the sector.
These constraints have also had severe labor market implications. Many producers have been forced to reduce staff numbers, cut salaries, or hire additional temporary labor solely for sticker application. Such outcomes contradict broader national economic objectives of employment creation and industrial growth.
In conclusion, while taxation remains essential for national development, the current structure and implementation of GRA’s tax and duty reforms impose disproportionate costs on SMEs, particularly water producers. Sustainable revenue mobilization should prioritise efficiency, technological innovation, and predictable administrative processes over cost escalation. Without recalibration, these reforms risk weakening SME competitiveness, disrupting supply chains, and slowing economic growth outcomes that ultimately undermine the very revenue goals they seek to achieve.
Ebrima Jarra
Aljamdou Village
