Assessing Local Revenue Generation for Local Governments in Liberia - Nov 2019

Governance Commission-Liberia

Description

The study identified the key challenges facing the existing tax collection system in all counties. Major lessons and intervention strategies have emerged from this study. This report provides key strategic and operational recommendations aimed at improving the methods, system of revenue collection, tax administration, collection efficiency, enforcement, reporting and security. Enhanced accountability and transparency will most likely persuade vast majority of citizens to pay more taxes for rapid development, whereas local governments will positively benefit from more own-source revenues to pay for enhanced quality services delivery which will, in turn, encourage voluntary tax compliance to avoid evasion.
The study found that the current tax collection system was and still remains highly centralized and inefficient for local revenue generation in the counties.  The actual rural tax and customs revenues collected internally by the Liberia Revenue Authority totaled about US$45 million, representing overall total domestic revenues from all fourteen counties and rural Montserrado County with an annual average amount of US$11.24 million from 2012 to 2015. Customs revenues accounted for the lion’s share of overall total domestic revenues from nine counties, while rural tax revenues contributed minimally by the remaining six counties. An overwhelming majority of respondents confirmed that Liberian people do not generally pay real estate taxes and taxes on private land.  At current low revenues collection levels, the aim of building a stronger Liberia through a sustainable fiscal decentralization in the country cannot be realized and unattainable.

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