FISCAL POLICY LETTER No1 – What Tax Policy In Cameroon After 2020?
The COVID-19 pandemic has imposed unprecedented negative consequences on the Cameroonian economy. To reduce the spread of the virus, the government imposed a range of measures such as social distancing and border closures to protect its citizens. While the social costs leave little to be desired, the pandemic equally took a toll on a majority of sectors across the economy, impacting wages, consumer spending, and profitability for businesses.
This fiscal policy letter analyzes the amended budget, delving into aspects related to the Covid-19 pandemic, as well as the structural factors that could determine the viability and sustainability of public finances in the coming decades. The first article looks at the implications of the pandemic for domestic revenue tax mobilization with the aim of improving the personal income and non-oil tax in the business sector. It recommends that the government consolidates public sector spending, reduces taxes on businesses in the non-oil sector, and suspend tax payments on businesses as the pandemic abates.
Meanwhile, the recently imposed phone tax is found to be punitive, which leaves policymakers room to boost revenues from other digital sources that relate to the use and storage of data, other important findings include the use of public-private partnerships as a tool to boost public sector efficiency and innovation. Amidst all this, it is essential to note that public sector effectiveness is futile without effectively decentralizing some aspects of public sector management. This letter finds that localities and regions stand to benefit from decentralization in several ways, from economic development, greater transparency, social cohesion, better procurement, and employment.
This letter concludes with a paper on intergenerational equity. It shows that the current method for public policy should give priority to economic development in a way that benefits the business sector. The results show that by developing free market policies that support the creation and management of enterprises, the state becomes better positioned to obtain the tax revenues it has set itself in the National Development Strategy (NDS30), while preserving intergenerational equity in tax payments.