IPNEWS: Once again, Liberians are alerted over another suspicious bill that has been passed by the House of Representatives over revenue sharing of the state without public hearings to determine the reliability of the new law in contrast to the Public Financial Law of Liberia, revised in 2019.
The House of Representatives amended Tuesday, September 13, 2022, the Public Financial Management (PFM) Act of 2019, currently serving as Liberia’s Fiscal Management instrument, drawing from the local government Act 2018. Lawmakers, particularly members of the House, said the amended law is an effort to enhance the country’s decentralization program and to share revenues with local governments for the development of the country.
“The new PFM Law, if concurred by the Senate, will show the country’s commitment to implementing the local government act of 2018 in accordance with the Revenue Sharing Bill.”
“The law is one of the financial instruments of the Local Government Act (LGA) of 2018, which is intended to ensure that fiscal resources, functions, powers, and responsibilities are transferred from the Central Government to the county governments to encourage greater participation of citizens.”
“The Revenue-sharing bill which has been passed by the legislature provides equity in revenues annually transferred by the central government to local governments for undertaking development activities as well as for implementing devolved and delegated functions in furtherance of decentralization.” A release from the House of Representatives reads.
Contrary to this, Liberians in various street corners are now beginning to express opposition and suspicion toward this new PFM Law amendment.
Unitary State
The constitution of Liberia declares the country as a unitary state, or unitary government, in which the governing system is a single central government system that has total power over all of its other political subdivisions. Unitary state, or unitary government, is a governing system in which a single central government has total power over all of its other political subdivisions, including revenue.
The unitary state is the opposite of a federal, where governmental powers and responsibilities are divided. In a unitary state, the political subdivisions must carry out the directives of the central government and have no powers to act on their own.
The unitary state is the most common form of government in the world.
In a unitary state, the central government may grant some powers to its local governments through a legislative process called “devolution.”
However, the central government reserves supreme power and can revoke the powers it devolves to the local governments or invalidate their actions.
Devolution of Power under a Unitary State
The term devolution of power refers to the transfer of power from a central government to the state, regional, or local governments, which occurs through individually enacted laws rather than through amendments to a country’s constitution. As a result, unitary governments retain the power to restrict or withdraw the powers of the subnational authorities at any time. This is in contrast to federalism, under which the powers of state, regional, or local governments are granted through the country’s constitution.
Suspicious law, why Now?
Part A of the Public Finical Law of Liberia requires Openness and Accountability. Section (1) states: ‘Subject to national security considerations, the public shall be provided with full access to all appropriate information concerning the financial affairs of the Government. This will include but is not limited to, information about the development of annual and supplementary budget estimates, the quarterly fiscal outturn reports issued by the Ministry of Finance and Development Planning, the monthly revenue and quarterly budget performance reports of ministries and agencies, state-owned enterprises their annual accounts and reports and the Government’s annual audited accounts.
In the case of the amended public financial law passed by the House of Representatives, Tuesday, September 13, 2022, was done without the knowledge of the public, including the holding of a public hearing for greater public participation.
Amidst the passage of the new PFM law, there are mounting public concerns about why should there be any amendment to the PFM law chapter 13,14, & 15, granting revenue sharing when there is already allocation of monies for social development across all counties of Liberia.
Further, Part B of the Public Financial Law states that for the purpose of these Regulations, (a) Non-Tax Revenue includes fines, penalties, forfeitures, fees and charges, lease or rent on government natural resources, lands and buildings, interest on government investments, dividends and all other revenue generated from the activities of departments; now, the question prevailing is, will the government now subjugate its authority required under the unitary state to have counties deploy revenue agents in quantifying collected revenue to satisfy the balance sheet?
Double Financial Regime
The local Government Act 2018 Article 1, & 2 states: Cognizant that Local Governments would not immediately have the capacity to collect their own revenues, sub-section 4.5(b) of the LGA-2018 authorizes the Central Government to continue to collect taxes for the next ten (10) years. Accordingly, for the next ten (10) years, all taxes shall continue to be collected by the Liberia Revenue Authority (LRA) of the Central Government, while Article 2 states: Notwithstanding the above, all taxes collected by the Liberia Revenue Authority for Central Government are co-owned by Local Governments and shall be shared with them in a fair, transparent, and accountable manner, considering roles and responsibilities at both levels of governance.
The contending issue on the passage of the new PFM Law is Chapter 4, Article 3, 4 & 5, which states that within the context of the above, revenues collected shall be shared at the following levels and among the following functionaries: between the Central Government and Local Governments; between all fifteen (15) Local Governments; and among sub-units (municipalities) of each Local Governments. Article 4: There shall be two (2) types of revenues that shall be shared. The first type shall be all revenues that are generated and collected from non-natural resource sources such as real estate taxes, income taxes, licenses, permits, professional fees, and leases of government assets, while Article 5 states that the second type shall be natural resource-based revenues collected from the operations of concessionaires and companies covering areas such as forestry, iron ore, gold and diamonds, and oil and gas.
Interestingly, the amended portions of the Public Financial Law of 2019, sections 13,14,&15, under contingencies fun; contingencies appropriation and Development fund detail in section 6 of the revised PFM law of 2019.
