Increasing the fiscal space in Sierra Leone
To achieve sustainable economic growth, Sierra Leone must expand its fiscal space by enhancing revenue collection through targeted enforcement, staff capacity building, tax structure simplification, and digitalisation of tax processes. Additionally, tax administrative reforms, including property tax reforms, can be as impactful as tax policy changes in closing tax gaps and improving transparency.
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Kamara-and-Mittra-Policy-Brief-February-2025.pdf
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Sierra Leone needs to increase its fiscal space. Despite recent improvements, the tax-to-GDP ratio remains persistently low. Macroeconomic volatility further impacts the country's fiscal position. Without greater fiscal space, Sierra Leone cannot make the public investments necessary for sustainable economic growth.
- Implementing targeted enforcement via audits in customs, VAT, excise, and domestic taxes can significantly boost revenue collection by addressing tax evasion.
- Building staff capacity, simplifying the tax structure, and digitalising tax processes can streamline operations, reduce administrative costs, improve taxpayer compliance, and enhance transparency.
- Tax administrative reforms, such as property tax reforms, can often be as effective as tax policy reforms in generating revenue. Revenue-collecting authorities should cooperate to close tax gaps.