Domestic Resources Mobilization Strategy a Case Study of the Republic of Liberia


– At Addis Tax Initiative (ATI) Meeting in Paris
Deputy Minister for Fiscal Affairs at the Ministry of Finance and Development Planning, Hon. Samora P.Z. Wolokolie, Tuesday, November 27, 2018 presented on Liberia’s Domestic Resource Mobilization Strategy for the period 2018 to 2022 at the Addis Tax Initiative Meeting in the French capital, Paris.
The Initiative is a multi-stakeholder platform launched in the course of the 3rd Financing for Development Conference in Addis Ababa in 2015. It intends to generate substantially more resources for capacity building in the field of domestic revenue mobilization / taxation as well as more ownership and commitment for the establishment of transparent, fair and efficient tax systems.
Making presentation on behalf of the Government of Liberia, Minister Wolokolie outlined several factors which necessitated the development of the Domestic Resource Mobilization Strategy for the next four years. He named: low revenue share of GDP (around 14.3% of GDP excluding grants), stagnating domestic debt (around 2% of GDP), declining grants (2% of GDP), low donor transfers (from 60% to 16% of GDP), public debt (middle to high distress) and volatile net remittance flows (US$ 50m net outflow, 2013).
Meanwhile, Minister Wolokolie has highlighted several areas of policy reforms including: addressing of revenue losses with emphasis on reducing tax holidays from Concession Agreements, Executive Orders and Tax Credits and reviewing Section 16 of the Revenue Code. He disclosed that revenue loss averaged more than US$100m annually.
Also as part of policy reforms anticipated under the 4-year Domestic Resource Mobilization Strategy, Hon. Wolokolie mentioned moving from GST to VAT while maintaining rate at 10%, simplifying the Revenue Code for wider understanding and citizens’ participation, conducting a comprehensive review of non-tax revenue by the Ministry of Finance and Development Planning so as to streamline the effective tax rate and burden on taxpayers, providing adequate support of the mandate of the LRA, as well as enacting appropriate legislation mandating receipt for every transaction involving exchange of value to curb corruption.
With respect to Tax Administration Reforms, Hon. Wolokolie disclosed that the Strategy was looking at Introducing electronic & mobile tax system to reduce compliance costs and increase efficiency, expanding access to LRA services through major infrastructure development, introducing excise stamp and increasing excise tax rate as well as strengthening LRA’s capacities in major areas of international tax audit, large tax enforcement and natural resources management.
Additional reform proposals discussed by the Deputy Minister were in the Agriculture, Fisheries and Forestry, as well as the Mining and Financial Sectors. Some of the proposed strategies he highlighted to enhance the mobilization of domestic resources in the Agriculture, Fisheries and Forestry Sector are focusing on market-led agriculture for food security with particular reference to rice production, high value horticulture and other cash crop, the introduction of Agro-pole and incentivizing youth with training and start-up capital as “agri-preneurs”.
He said the Government’s 4-year Domestic Resource Mobilization Strategy will consider establishing Precious Mineral Marketing Corporation (PMMC) to add value such as polishing diamonds, develop precious metal sub-sector, facilitate marketing and withhold taxes from buyers and sellers and organizing artisanal miners into corporatives for tax purpose.
Moreover, as part of the anticipated Reforms in the Financial Sector, Hon. Wolokolie discussed the proposal to move away from a dual currency regime to the usage of Liberian Dollars only to reduce loss of sieniorage to the US Treasury and combat capital flight averaging about US$ 1 billion a year. He also disclosed that the Financial Sector Reforms will include the introduction of various financial instruments including Treasury Certificates and Diaspora Bonds as well the establishment of Liberia Stock Exchange, Venture Capital and Investment Trusts.
Hon. Wolokolie has however stressed that the Domestic Mobilization Reform Strategy which embodies the various reform proposals will firstly have to be approved by Cabinet before implementation.
The ATI Meeting held in Paris, France from 27th to 28th November, 2018 was hosted by the French Ministry of Finance and French Ministry of Foreign Affairs. It composed of ATI plenary meeting and meetings of the ATI Consultative Groups.

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