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taxation and revenues

Date Snippet Page
2014/06/02 Oil income in the 2013-4 financial year was USD 3.5 bn. After deductions for loan repayment and agreed contribution to Sudan, the revenue for GRSS was 1.9 bn, according to the oil minister. Snippet: Oil income in the 2013-4 financial year was USD 3.5 bn. After deductio....
2014/05/12 The WBGS assembly raises taxes on alcohlic drinks from 30 to 50 percent. Snippet: The WBGS assembly raises taxes on alcohlic drinks from 30 to 50 percen....
2014/05 The road linking Kuacjok (the Warrap State capital) to Tonj South County, Lakes and NBGS is likely to become impassible during the rainy season unless there is special help from the national government, says the Tonj South Commissioner. The 'social taxes' of SSP 30 per household raised at local level are inadequate to maintain the road. Snippet: The road linking Kuacjok (the Warrap State capital....
2014/03 WBGS Chamber of Commerce says vehicles moving from Juba to Wau must pay SSP 4,000 at road checkpoints. The police spokesperson says such 'taxation' is illegal. Snippet
2014/03 Traders in Torit complain at irregular and excessive taxation. The EES government is said to have plans to unify tax collection. Snippet 1709
2014/02/28 Trucks bearing relief aid from Juba are having to pay heavy 'taxes' at roadblocks - USD 1 to 3 thousand to Bor; 3 to 6 thousand to Bentiu - according to civil society organization CEPO. Snippet 1493
2013/06 to 2013/10 South Sudan received USD 1.3 billion from oil sales between June and October, according to the oil ministry. At the same time it paid USD 0.33 billion to Sudan as tariffs and Transitional Financial Agreement payments. About 85 per cent of the oil was produced from the Upper Nile fields. Snippet
2013/10/08 The education minister says that the allowances of university lecturers (who are striking) cannot be reinstated until January 2014, because the government's oil revenues have not yet returned to pre-shut-down (January 2012) levels. Snippet
2013/08/24 The WBGS finance minister explains to the state parliament that the July salaries of state employees have not yet been paid because the national Ministry of Finance sent the salaries without the 4% 'state portion revenue collections'. The state governor was currently in Juba trying to get a solution. This situation was said to be common to all the states. The national Ministry of Finance had already imposed a cut in the state budget of almost half. Snippet
2013/01 The national finance ministry makes and agreement with state ministries on taxation, in which the states retain revenues from income tax on their own employees and agree to cooperate with the centralized collection policy. Snippet 1166
2013/08/07 New finance minister, Aggrey Tisa Sabuni, say he will simplify the taxation system in an effort to increase non-oil revenues. Snippet 1126
2013/07 to 2013/08 Prices of transported goods rise sharply in Bentiu in a few weeks. The price of a sack of sorghum increases from SSP 200 to SSP 300. The timing of the increase is associated with heavy rain making roads almost impassable. Some blame trader exploitation. Traders blame taxation. The state director of taxation says goods are taxed at five percent, a lower rate than in other states. Snippet
2013/07 The director general of mineral development surmises that the value of gold produced by 'local miners', untaxed and mostly unofficially exported, could be about USD 600 million per year. The main sites are Greater Kapoeta in EES, Udabi in Morobo County in CES, and Pachalla in UNS. Snippet
2013/06 Upper Nile State Governor, Simon Kun Puoch, tries to put all tax collection in the hands of the state rather than the national government authorities Snippet 1009
2013/07 Upper Nile State cannot get enough tax receipt forms from the national government, so has to use Sudanese ones instead. Snippet 1008
2013/02 The Government of NBGS starts collecting household taxes for state revenues (Hou Akot Hou/The Niles, 4 February 2013) Snippet 613
Reference Mini-review
Hou Akot Hou, 2013/02/04. Household taxes operation starts in Aweil [Article] The Niles. Accessed online.

Useful short description of a traditional kind of taxation through chiefs.

Jason Hickel, 2012. Constituting the commons: oil and development in post-independence South Sudan [Chapter/section] In Karl Lindquist and Mike Howard (eds) 'Exporting the Alaska model'. Palgrave Macmillan. Accessed online.

Outlines some of the policy challenges posed by South Sudan's oil resource, and recommends several very ambitious and thought-provoking measures. These include fixed proportional budget categories for the spending of government oil revenues. 15 per cent to be immediately distributed in cash to all adult citizens, who would also receive a regular dividend from a permanent oil revenue investment fund. This would form a basis for personal taxation. Both the dividend and the taxation would improve the quality of the social contract between government and people.

GOSS, 2011/12/23. The Taxation (Amendment) Act, 2011 [Operating document] Government of South Sudan. Accessed online.

Makes minor changes to the Taxation Act, 2009, the main one being the institution of a business profit tax. The rates are 10% for 'small', 15% for 'medium' and 20% for 'large' businesses, but the meanings of 'small', 'medium' and 'large' are not defined within the Act.

GOSS, 2009/08/24. The Taxation Act, 2009 [Operating document] Government of South Sudan. Accessed online.
GOSSTaxation Act (Amendment No. 2) Provisional Order, 2012 [Operating document] GOSS. Accessed online.

This presidential order was issued in the context of a need for austerity in the face of a cut-off in oil production and revenues. It increases the range of taxable items and many of the rates of tax.

Article

Tax and other government revenue

This article is by Michael Medley.

Michael would welcome a co-author, or other authors to further develop aspects of this topic. If you might be able to help, please see the contributing page.

Tax name National rates
Personal income tax
  • On monthly income:
    • SSP 301-5,000: 10%
    • >SSP 5,000: 15%
Business profits tax
  • Small businesses: 10%
  • Medium businesses: 15%
  • Large businesses: 20%
Excise tax
  • Tobacco, spirits: 30%
  • Wine, beer: 20%
  • Soft drinks including water: 5%
  • Cars and motorcycles: 15%
  • Trucks and buses: 10%1
  • Vehicle fuel: 5%
  • Air transport: 10%
  • Telecommunications: 10%
  • Insurance premiums: 5%
Sales tax
  • Goods produced by:
    • small businesses: 10%2
    • medium businesses: 15%2
    • large businesses: 15%2
  • Hotel, restaurant & bar services: 15%2

Table 1: Major taxes and their rates

Sources: The Taxation Act, 2009, The Taxation (Amendment) Act, 2011, The Taxation Act (Amendment No. 2) Provisional Order, 2012.

Notes:

  1. A 10% tax on buses and trucks was included in the 2009 Act, but not mentioned in the revised schedule of excises goods in the 2011 amendment. It is not clear to SSCinfo whether this levy was abolished or not.
  2. These amounts include a 10% surcharge imposed through the 2012 Provisional Order, to be effective during the period of the Austerity Budget.

Meaning of 'revenue'

'Revenue' here means any money which the government gets for its budget. In a narrow sense the word sometimes only refers to money from regular taxes and official fees. But it could also include sales of public property (including oil/petroleum), drawing on reserves, and borrowing.

 

Recent quantity of revenue: oil and non-oil

For 2010, total government revenue was estimated at SDG 5.8 billion (equivalent to approximately USD 2.5 billion at the official exchange rate), of which about 98 per cent came from shares of production in oil (petroleum) (ref). SSCinfo does not have equivalent figures for later financial years. But in January 2012 oil extraction was suspended, due to conflict and disputes with Sudan. The 2012-2013 national budget envisaged financing most of the government's needs from borrowing, reserves and sale of concessions (ref). But it also relied on an expanded contribution from regular non-oil revenues, reaching to about ten per cent of the budget. Indeed, according to finance ministers monthly non-oil revenues have risen from SSP 29m in December 2011 to SSP 54m in April 2012 (ref) to SSP 70m in August 2013 (ref).

 

Efforts to increase non-oil revenues

Increasing non-oil revenue is seen as an important strategy for the government in view of the instability and likely decline of oil revenue (see article on oil/petroleum issues).

How have the recent increases in non-oil revenue have been obtained? The budget speech in June 2012 referred to clarification and streamlining of tax collection, particularly as between the central Directorate of Taxation and the authorities in the various states (ref). For more on this, see below. Another likely area of improvement has been in the system for making automatic deductions on payrolls of formal-sector employees.

It is unclear to SSCinfo how much more the revenue can be expanded by this kind of technical improvement. Beyond this, further enlargement may require new forms of taxation and fees or – importantly – growth of the non-oil sectors of the economy.

 

Tax laws

At the time of writing the main tax laws seem to be:

 

The kinds of tax and other revenues being collected

The abovementioned tax laws envisage four main kinds of tax:

  • personal income tax
  • business profits tax
  • excise tax
  • sales tax.

The main categories under these taxes, and rates at which they have been charged, are shown in Table 1.

Besides these, the laws provide for the government institutions to set 'institution taxes, fees and charges' as agreed with the finance ministry (ref). For the 2012-2013 tax year, the finance ministry aimed to collect about two-thirds of non-oil revenue through taxes and one third through fees and charges (ref). According to legislation, the various fees and charges should be published in a list kept by the finance ministry. But this list does not seem to be maintained on the internet, and SSCinfo has not seen it.

Some forms of taxation and revenue seem to be largely outside the scope of these taxation laws, though they are partly governed by other laws. Important categories are:

  • oil revenues
  • drawing on reserves
  • government borrowing
  • state-level taxation.

Oil revenues. It is unclear to SSCinfo exactly what the components are of these. Presumably they are largely detemined by the Exploration and Production Sharing Agreements (ESPAs) signed between GOSS and the oil companies. The Petroleum Act, 2012, requires the petroleum ministry to publish all EPSAs, but at the time of writing it seems that no EPSA has been made public (ref). EPSA's are reported typically to allocate a share of oil production for GOSS to sell (ref), but it is possible that oil companies are taxed in various ways as well. And besides a revenue flow when oil is being produced, oil revenues might include the sale of new concessions. In February 2013 it was reported that GOSS had recently sold several new concessions at prices between USD 200 million and USD 300 million, without making the details public (ref).

Drawing on reserves. The South Sudan Statistical Yearbook 2011 prints amounts of money moved in and out of reserves each year from 2005 to 2010 (ref). The reserves may have been in the form of the Oil Revenue Stabilization Account (ORSA) established under the CPA and administered under the Sudan Government of National Unity during those years. SSCinfo does not know how much money GOSS held in reserves at the time of Independence. But in the Austerity Budget at the beginning of the 2012-2013 financial year it was planned to draw down from them SSP one billion (ref).

Government borrowing. Similarly, the overall amount and structure of GOSS debt is unclear. The 2012-2013 budget set out aims to raise SSP one billion from domestic loans and SSP 3.7 billion from a combination of foreign loans and sales of concessions (ref). The boundary between the last two might be blurred if oil is used as collateral for loans. The domestic SSP one billion was reportedly raised through an issue of treasury bills in late 2012 (ref).

State-level taxation has a basis in the Transitional Constitution (Article 179), which says the states 'shall legislate for raising revenue or collecting taxes' from various possible sources. Some of these sources correspond to provisions in the taxation laws, and some do not. The states have adopted a variety of approaches. One is to use a traditional kind of poll tax, that falls on each community, person or family, in which chiefs help the local government (or army) to collect cash, grain or animals. A recent example of this is described by Hou Akot Hou in The Niles. This kind of system faces particular problems of transparency and accountability, but it may have the virtue of creating a more direct relationship between the government and the people, in which people get more of a sense of their moral claim on government.

 

Questions to pursue

  • What is the breakdown of income from different kinds of tax and charge?
  • What are the terms of the production-sharing agreements between GOSS and the oil companies?
  • What are the current practices of revenue collection in each state?
  • What are the prospects for harmonization of state and national revenue collection, and elimination of abuses?
  • Is there potential to improve the traditional poll tax?

Conflict between the centre and the states over tax

There seems to be some conflict between the state-based taxation mandated in the Transitional Constitution, and the Taxation Acts which envisage a nationally-centralized system of tax collection under the Directorate of Taxation (which is under the finance ministry).

This lack of harmony has meant that states and national authorities have sometimes been taxing the same items and activities. Indeed sometimes the same things seemed to be taxed more than twice. Because there is more than one tax authority, tax payers are often unclear about who is taxing them: a situation which can easily involve corruption. A clear example has been the stopping of freight vehicles at checkpoints on the roads. A 2011 survey (ref) found that such checkpoints were to be found on average every 25km along the major trade routes in South Sudan, and – except for one route – payment was demanded at 97 per cent of them. Often, no receipt was provided for the payment. This added greatly to the cost of trade and traded goods, and it was unclear at best how much of the money reached the public purse.

In an effort to clear up this situation, the national finance ministry has followed a policy of centralizing tax collection while negotiating with states on their shares of revenues. A partial agreement was reached in January 2013 (ref). But it appears not to have held in all respects. In Upper Nile State, for instance, the governor's office later curbed the activities of the national taxation authorities (ref). The state government had claimed that some of its activities were illegal, and also that it failed to supply adequate quantities of receipt books and other forms.

 


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