By Tanu Jalloh, Lead Consultant, OTI-Sierra Leone
The Open Tax Initiative (OTI-Sierra Leone) is a media-led project of the National Advocacy Coalition on Extractives and Free Media Group that seeks to promote openness in tax administration using investigative reporting and advocacy journalism.
The initiative was borne out of an intensive training, to which the current lead consultant Tanu Jalloh was a participant at the City University in London. The ‘Introduction to Illicit Finance, Financial Secrecy and Asset Recovery Spring 2015’ course for journalists had been organised by the Tax Justice Network and the Centre for Investigative Journalism 2015. The short but very rigorous exercise was aimed at practicing journalists across the world that were keen on investigating tax avoidance, corruption, money laundering and asset recovery.
Back in Sierra Leone OTI has already started using what it calls the TRIANGLE OF RESPONSIBILITY to capture and present the characteristics of the country’s tax systems and policies as they relate to social and economic benefits. This effort is being supported by the Tax Justice Network and the Centre for Investigative Journalism.
The model, designed to link the three ends to the triangle or responsibility, traces tax activities from: (1) THE CITIZENS (be they people or corporations) who pay their taxes and should also be willing to openly discuss their tax obligations; to the TAX COLLECTORS (the National Revenue Authority) who collects taxes (in the form of revenues) from tax payers and other sources; to the GOVERNMENT that administers revenues generated from taxes. In simple terms we are saying that citizens pay taxes and talk about them; but NRA collects taxes and hardly directly engages those who pay them; and most importantly successive governments have failed to point to specific projects in direct account for tax monies. We have to report all of that and raise awareness around tax commitments and accountability.
However, to be able effectively understand and ultimately interpret these activities from the perspectives of advocacy journalism, requires that certain platforms be created to ease access so that the citizens in turn will benefit from the analyses being provided by journalists. They include such governance structures that support open data, transparent and accountable reporting systems on tax policies as they relate to social and economic priorities. These should be instituted and be made to function without bottlenecks and red-tapes that are often typical of administrative bureaucracies. The worry is that there is the likelihood that any advocacy work and general reporting on a sector as complex but also as imperative as the tax systems with particular reference to the mining and extractives sectors – contracts and licenses, operations, revenue generation and allocation of resources to improve on citizens’ welfare – will be very challenging and therefore will almost certainly give rise to speculations about facts that otherwise should be in the public domain.
As part of an assessment done between July and December last year, the OTI consultant realised that there still exist a huge level of ignorance on some missing links in the value for money chain, the intent upon which any progressive tax systems operate. The desk study found out that citizens, as tax payers, don’t have a system whereby they can easily and freely seek to understand how the tax systems, to which they might be committed, actually work? People still haven’t come to terms with how and when and why are revenues being collected by NRA? They express doubts as to who actually benefits from the money raised from taxes? How much is being raised each year? It is not clear how are targets for revenue generation being set each year by government and what informs such policy objects? When are taxes to be collected in the course of the year and what types of taxes are being collected and which of these actually affect them directly?
To that end the Open Tax Initiative Sierra Leone sits well within several calls for open government and accountable leadership; sustainable social entrepreneurship and knowledge management with the aim of raising awareness around governance issues generally and socio-economic empowerment in particular. It also helps to stimulate concerns around democratic transitions through such efforts to make effective tax policy and revenue management, from natural resources, as a prominent consideration for political party manifestoes. In essence we want to make tax issues so important that the electorates will consider using their knowledge – which we hope to improve upon in the next two years through frequent reporting and detailed analyses – about effective tax administration or the lack of it being a sensitive trigger for informed decision making at the polls.
Our biggest source of hope to deliver on an open tax system and related economic benefits, especially in a natural resource rich country like Sierra Leone, has been the latest standards set for complying countries by the Extractives Industries Transparency Initiative, the EITI. After the secretariat of the global natural resource governing body met in Lima, Peru (South America) in February this year, they closed their meeting with a new set of principles, the fifth such efforts since 2003, to attain value chain in natural resources and public benefits.
In her forward to a report on the the EITI standard 2016, chair of the EITI Board, Clare Short,emphasised that the latest principles, on which the EITI is still based, state that “the wealth from a country’s natural resources should benefit all its citizens and that this requires high standards of transparency and accountability. This Standard seeks to deepen the link between those Principles and the working of the EITI”.
Having gone through the document the new urge is for “EITI implementing countries are encouraged to…release data under an open license that allows users to freely obtain and easily re-use it”. This is where we come in to reiterate that call for openness, this time with emphasis on the tax systems of the country, not least, because its governing sovereignty can be respected as a result of developments borne by domestic revenues.
The Revenue transparency remains a fundamental aspect of the EITI. The requirements have been reordered to better reflect the importance of bringing transparency to other aspects of resource governance, such as licensing, production and revenue management. The requirements now follow the extractive value chain order and cover: first oversight by the multi-stakeholder group, then legal and institutional frameworks, exploration and production, revenue collection, revenue allocation, and finally social and economic spending and outcomes.
This 2016 version of the Standard encourages countries like Sierra Leone to make use of existing reporting systems for EITI data collection and make the results transparent at source, rather than duplicating this exercise through EITI reporting.
Shot observed that: “publishing reports is not a goal in itself”, and more importantly she recognised the fact that “EITI reports increasingly contain important recommendations aimed at improving tax collection systems, auditing procedures and other legal and administrative reforms. This is where the potential impact of the EITI is often greatest”.
Like the EITI the Open tax Initiative also feel that ‘The Standard’ has been revised to ensure that reports are transparent about which recommendations the government chooses to take on and why, and lay out the plans for doing so.
While we are happy that the 2016 Standard introduces new aspects and breaks new ground in that the identity of the real owners – the ‘beneficial owners’ – of the companies that have obtained rights to extract oil, gas and minerals will have to be disclosed from 2020, we feel the job starts now. In many resource rich countries, including Sierra Leone, ownership secrecy contributes to corruption, money laundering and tax evasion. \
(C) Politico 21/04/16
