Minister of Information, Alpha Kanu has stoutly defended his government's decision to provide tax breaks and other duty waivers which a new report says cost the country over US$ 600 million in 2010 - 2012. The report says if the trend continues it will cost the country about US$ 240 million this year amounting to around 13% of GDP. .
Titled "Losing Out" the 28-page report which was launched on Tuesday, says the giveaways to especially the two main iron ore miners African Minerals and London Mining Company have been in the forms of duty and custom waivers, corporate income tax and domestic tax waivers.
It says the concessions are often given "behind closed doors" and exempt even business houses that supply goods to the companies from paying Goods and Services Tax.
Kanu denied his government had done anything wrong. He told Politico the government needed to give the concessions and waivers as they were "extremely necessary" to attract investment into the country.
"Industrial activity in Sierra Leone was very minimal in 2009 and so Government needed to stimulate the economy by attracting investment" he said, adding that "there are competing countries around with similar natural resources. So you had to be the early bird that caught the worm."
Britain, the biggest bilateral donor to Sierra Leone, gave £ 51.3 million to Sierra Leone in 2010/11 financial year and £ 55.8 million in 2011/12 one. The annual concessions given to mining companies far outstrip both years of UK aid to Sierra Leone.
But the minister said the competition with other countries with the same resources prompted his government "to introduce some tax incentives to attract investors to come here rather than go to other countries such as Liberia with the same resources".
On the hundreds of millions of dollars lost by government as a result, he said the country was gaining "well over US$ 400 million out of a zero investment if we had left the climate as it was...So if we lose $ 200 million and gain $400 million there is a net gain of 200 million dollars".
(C) Politico 17/04/14
