A critique of the extravagant ‘taxation imbroglio’ hovering over the 2017 Finance bill of Cameroon, by CACLiTA, 7 February 2017

The 2017 budget of Cameroon is being executed within a context marked by the optimum mobilisation of both external and domestic revenue, notably with the entry into force of the economic partnership agreement (EPA) with the European Union, the fight against terrorists groups like Boko Haram, the search for greater socio-economic efficiency and the improvement of the quality of public spending and services. The state has set an agenda to raise 4373.8 billion FCFA representing the 2017 budget. The government of Cameroon is bent on achieving a 6 per cent growth target in 2017 despite the turbulent context.

According to a recent report by the pro-government daily Business in Cameroon, Alamine Ousmane Mey, Cameroonian Minister of Finance, opines that economic activities would increase in volume in 2017, due in part to the provisions made by the government in the 2017 Finance bill. He highlighted in an interview granted by the pro-government daily that, “the measures set in the Finance bill adopted in Parliament will further boost the economic activity. These are measures which goals are to truly increase revenues, lead to the creation of new activities through promoting investment and, in parallel, protect the rights of the taxpayers, as we strive for social and economic promotion by encouraging youth recruitment”.

In his interview, Minister Alamine Ousmane Mey particularly insisted on “the new dynamic considered” in the agricultural sector, with “several tax incentives” to benefit from. He added that there shall be tax exemptions on the purchase of agricultural equipment, which add to more production and competitiveness of the Cameroonian agriculture.

The position by Cameroon’s Minister of Finance is not shared by all. Many Cameroonians are of the view that the financial burden of raising revenue to meet up with the growth expectations in the country falls more on tax payers. A recap on the 2017 Finance bill reveals that there has been an influx of new taxes like value added tax on furnished apartments, tourist tax on visits at hotels and more disturbingly an increase in the price of communal stamps. No fewer than thirty tax and customs measures will be put in place to raise the 4373.8 billion FCFA representing the 2017 budget.

According to a local paper ‘le Messager’ dated 5 of January 2017, the Director General of Taxation argues that measures such as the imposition of a visitor’s tax ranging from 500 to 5000 FCFA per night at hotels; the imposition of VAT for furnished apartments, and an increase in the price of the communal stamp from 200 to 600 CFA francs are all steps “to improve the living conditions of citizens”. In the same light, other measures are envisaged to mobilise revenue. For instance the export of medicinal plants will be taxed with a rate of 2% imposed on the right of exit. Vehicles over 10 years old will also be taxed and there will equally be an increase from 17.5% to 20% of the right of exit on timber.

Dieudonné Essomba, an economist and President of the African School of Contemporary Economics, opines that “these measures of the Ministry of Finance will intensify the crisis”. According to Essomba, these measures which are aimed at raising more revenue will rather lead to serious debt and underdevelopment. Essomba suggests that there is instead a need to “find mechanisms that reduce public spending. The right solution is to direct demand to local production, regardless of its quality and cost.”

There is no gainsaying that the 2017 Finance bill has created at atmosphere of more taxation rather than an atmosphere of more local production and trade. There was need for the state to focus on more avenues of creating wealth such as trade and creating favourable conditions for investment. In addition, corruption still remains acute in Cameroon, most of the money which will be collected will end up being siphoned.

There is therefore a need to tighten public expenditure via the reduction of unneccesary government spending. There is equally a need to ensure  that there is discipline in the execution of public finances. The government has to control unproductive missions home and abroad. If some of these measures are experimented especially with respect to future budgets, then Cameroon may have hopes of moving from a highly indebted country to an emerging economy.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s