Liberia—Revenue Generation for Governance and Growth (RG3)

Client: U.S. Agency for International Development

Duration: 2016-2021

Region: Sub-Saharan Africa

Country: Liberia

Solutions: Economic Growth Governance

Enhancing the government of Liberia’s ability to collect taxes from its citizens, known as domestic revenue mobilization (DRM), is a critical part of helping the country meet the long-term development goals laid out in its ambitious Agenda for Transformation. However, tax evasion, poor tax policy, and ineffective enforcement all constrain the government’s ability to raise the funds it needs to provide basic services to citizens and promote economic growth and social development in the country.

The Revenue Generation for Governance and Growth (RG3) project supports the Government of Liberia to confront the challenge of improving its tax collection system and cultivating a sense of accountability among taxpayers. DAI’s approach holistically addresses DRM and tax system reforms. We pair supply-side support to key government ministries, in the form of capacity building to improve policy, efficiency, and enforcement, along with demand-side interventions that increase taxpayer morale through raising awareness of taxation responsibilities, newly simplified payment methods, and the risk of enforcement for noncompliance.

Sample Activities

  • Work with staff across the Ministry of Finance and Development Planning to build capabilities in tax policy design, tax organization structure, and drafting of tax-related legislation.
  • Facilitate the meeting of stakeholders from the private sector, civil society, and government to develop a “fiscal pact” that makes the social contract of taxation explicit and tangible.
  • Support the Government of Liberia in development and roll-out of education and awareness campaigns through outreach tools such as billboards, paintings, and radio ads.
  • Support the establishment and operationalization of a toll-free call center to handle taxpayer questions in a customer service-oriented manner and route complaints appropriately.

Select Results

  • Increased taxpayer inquiries to the LRA call center tenfold through aggressive mobile text-messaging outreach.
  • Conducted innovative text-based taxpayer perception survey and cost-of-compliance survey using computer-assisted telephone interviewing.
  • Assisted LRA to establish centralized data processing center that has improved transparency encompassing some 70 percent of revenues and is generating crucial information to inform audit selection and improve revenue forecasting.
  • Assisted establishment of Taxpayer Advocate’s Office, which is standing up for taxpayer’s rights in areas such as customs clearance and verification of tax compliance.
  • Helped LRA allow taxes to be paid through commercial banks and their branches—as much as $7.3 million in taxes was paid using this method though August 2017.
  • Increased tax payment transactions by 48 percent in March–August 2017 compared with the same period in 2016, which is expected to lead to increased revenues for the government.
  • In cooperation with the Ministry of Finance and Development Planning (MFDP), developed revised draft excise tax legislation that should help significantly increase revenue.
  • Introduced mobile payments for all taxes and select non-tax fees to reduce time and cost for taxpayers and eliminate risky cash transactions.
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