Sunday, October 3, 2010

Mayhem on Restoring Sales Tax on Rice


 Posted by Modou S. Joof on January 19, 2010 at 8:22pm
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Banjul, The Gambia (TNBES) The announcement that the ‘government would restore the sales tax on imported rice to the 5 percent level’ must be received with mixed feelings, the Online Publication, Mansa Banko reports.

For an economy which is heavily dependent on revenue generation, this was first and foremost a revenue measure since, through “the government in 2008 zero-rated the sales tax on rice as a policy measure to minimize the impact of the food crisis”; we are told this meant “foreign significant revenues”.

And whereas one may really wonder whether “ we have passed the episode of high food prices’ as asserted by the Finance Minister in his Budget Speech, yet the need to “encourage local agricultural production” was always and still is a valid goal.

Indeed, pundits have generally agreed that it is a good thing to encourage local food producers whose efforts, it is believed, are undermined by the dependence on imported rice, for example, which importation trends to discourage local production. This happens; the argument goes, when especially the government subsidizes the rice price to make it affordable to urban consumers.

The problem we wish to highlight here through is the fact that locally produced rice is not easily available in the market-not in Greater Banjul area anyway.

Remember there was a time when this rice was being provided by the Kuntaur Rice Mill, and could be brought in diverse places in Serrekunda. As far as we know, this is no longer the case.

Thus one must worry about the likely effect of the government measure which could cause an increase in the price of imported rice and its impact on livelihoods, a time when locally produced rice is not readily seen in the urban areas where a significant proportion of the country’s population resides. Thus the issue needs to be studied closely.

Another matter which begs for clarity is the claims of a bumper harvest of crops in the country frequently made on the public news media.

For instance, it was announced that Kanilai Farms alone is expecting to harvest at least 10,000 tons and, in fact, up to 25,000 tons (is it of rice or of all crops?) this year, from its around “200 farms” countrywide, which was announced recently by President Yahya AJJ Jammeh himself on GRTS television.

National farm production figures are usually provided and confirmed by sources such as the Ministry of Agriculture. Are we to assume that the crops production figures given in the 2010 Budget Speech include all produce by all farmers and farming entities in the country?

Ideally, in the interest of transparency and to facilitate accountability, the relevant official sources, being the sources to turn to reliable facts and figures, should endeavour to publish such information. If Kanilai Farms has become an important big player in the country’s agricultural sector, going by the figures cited above, then one would expect to hear mention of this information in relevant official sources, Mansa Banko said.

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