Losing Out: Sierra Leone’s massive revenue losses from tax incentives

Report for Budget Advocacy Network, Sierra Leone (April 2014)

This report analyses Sierra Leone’s ‘tax expenditure’ – i.e., the amount of revenues lost by the government’s granting of tax incentives and exemptions. Using figures obtained from the National Revenue Authority, the report estimates that the government lost revenues worth $224 million in 2012, amounting to an enormous 8.3 per cent of GDP. In 2011, losses were even higher – 13.7 per cent of GDP. The massive rise in revenue losses since 2009 is the result of tax incentives granted to the mining sector. The report estimates that the government will lose revenues of $131 million in the three years 2014-16 alone from corporate income tax incentives granted to five mining companies. Tax expenditures could instead be spent on improving education and health services, investing in agriculture and in providing social protection to vulnerable groups. Yet in 2011 the government spent more on tax incentives than on its development priorities. In 2012, tax expenditure amounted to an astonishing 59 per cent of the entire government budget – over 8 times the health budget and 7 times the education budget.

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