Government’s clarifications on tax income derived from the escort

ON THURSDAY, FEBRUARY 26, 2009 AT THE MINISTRY IN CHARGE OF PUBLIC ACTION PROSPECTIVE AND ASSESSMENT, TEN (10) MINISTERS HELD A PRESS CONFERENCE TO EXPLAIN HOW THE GOVERNMENT HAS BEEN MANAGING TAX REVENUES COLLECTED FROM TRANSPORTERS OF SECONDHAND CARS IN TRANSIT TO NEIGHBORING COUNTRIES.

This conference has been held amidst claims over mismanagement of tax income collected by the Government as escort duty from secondhand cars dealers.

Importance of escort duties in Benin economy

Benin as a coastal land is a strategic place for transport of goods, mainly secondhand cars, in transit to neighboring countries such as Burkina-Faso, Niger, Mali, Chad and even Nigeria. The transit of secondhand vehicles has been a very lucrative business both for individuals and for the State.

The Benin Customs escorts the vehicles in transit to neighboring countries till borders and collects for each car a duty worth 210.000 cfa francs instead of 350.000 cfa francs since the escort’s control has been taken away from private companies that used to run it under the previous regime. Cutting escort duty aims at making Cotonou Port more competitive.

According to the figures released by the Minister in charge of Public Action Prospective and Assessment, Pascal Irénée KOUKPAKI the amounts of receipts earned from escort by the Government was forty six (46) billions cfa francs at the end of the year 2008.

Accusations from political adversaries over escort duties mismanagement

Since Boni YAYI took over power in March 2006, there have always been allegations over mismanagement of the escort duties which would be spent to finance the Government’s program of loans to the poor; but what prompted this press conference was the recent statement from MP, Issa SALIFOU who at the UNDP convention in Bohicon on Saturday, February 21, 2009 made accusations about the way income derived from secondhand cars business is managed. According to him, even though the management, which was made about this State revenue under the former regime of Mathieu KEREKOU, was not transparent; what has been happening presently is worst for this tax income under the current regime is not budgeted.

Government’s clarifications

Mr. KOUKPAKI talks about the Government’s effort to appraise and improve the State assets

« In April 2006, let me remind you, the economical and financial state of our country was difficult. Remember, the Head of Sate has instructed the Government to appraise the State assets. In this process of State assets appraisal, we had to deal with State expenditures but also with the State incomes. We had to consider all options to increase the State incomes, combat frauds and recover unpaid taxes. »

How were escort duties formerly managed?

«When it comes to business of secondhand cars in transit to neighboring countries, we tried to find out how it works. We asked the Head of National Treasury questions and, I can assure you, the answers that we got were not satisfying for the figures regarding this business were not really available…. » In fact, under the former regime of Mathieu KEREKOU, private companies controlled the vehicle escort and there was a lot of opacity surrounding its management. At the time, media, Civil Society and even ordinary citizens had always regretted the huge looting of public resources.

Mr. KOUKPAKI went further to say « when the current Government took over in 2006, it inherited from the previous Government, a budget whose bill was passed in the National Assembly in 2005 and which did not consider the escort duties…»

How are escort duties managed now under the current regime?

«Therefore, we have recorded these receipts progressively as resources to finance the State budget. There are two ways of recording these receipts either as fiscal resources or non fiscal. It depends on the nature of the resources. Here, it just means that these resources are being used to finance the budget deficit. From State finance point of view, it does not make sense to say that escort receipts have financed some activities. If you go the National Treasury today and ask for the receipts records, you will find these resources. »

« An account had been opened by not a Minister but by the Head of National Treasury. This account had already been opened before the State took charge of the secondhand cars business management. So, it is not a special account; it is not an account that has specially been opened for this purpose. This account is named deposit account; that is the name the Head of National Treasury has given to the account which records the budgetary assistance provided to us by our partners. This account also records debts cancellations, since Benin has been a beneficiary of debts cancellations…When the Head of Custom deposits the resources derived from escort in the Central Bank in the account I have just talked to you about, he is given a form which recorded the operation and one copy of this form is sent to the National Treasury, one to the Ministry of Finance so that he might be aware of this deposit. Periodically, there have been confrontations between the Head of Custom and the Head of National Treasury. A report is made on these confrontations whose copy is forwarded to the Minister of Finance. Therefore, traceability of these resources is recorded in the State accounting system and the Central Bank sends a statement about all these operations relating to this account to the Head of National Treasury. One copy of this statement is sent to me. I can assure you that the Head of Customs has never been aware I receive this document. This allows me to have him under scrutiny. This is part all Finance Ministry’s tasks. It does mean there is a problem of trust. You know, control is necessary and it helps consolidate trust…»

What about microfinance?

« The Government did not mean specifically identified resources should serve to provide money for the National Microfinance Fund …We have a national microfinance policy, an instrument to finance the poor, a microfinance governance body, a Head of Microfinance. And the program has been financed by national resources from National Treasury. I have heard that it is not budgeted. This might lead to believe there is not traceability of it. I made sure it was budgeted and since I left the Minister of Finance, my successor has been doing it the same way. If you go and see the BCEAO accounts, you will find the records of it in the bank’s accounting system. This could be seen as credits of the Treasury to national microfinance fund. The National Treasury by doing so is assuming its role of State banker and it has the prerogatives to perform these operations as long as they have been approved by the Government and by the Finance Minister…»

On this issue, the Microfinance Minister, Reckya MADOUGOU also talked to the journalists in order to make her points. According to her, the loans have been given to the people on the base of objective criteria which have nothing to do with ethnical or political background. The Government does not give the loans directly on the ground but the microcredit has been provided to population through specialized institutions.

The Government assures that choice of beneficiaries is made objectively. It has also put in place investigatory missions to find out the way the operations have been performed throughout the country.

Apart from the Minister in charge of Public Action Perspectives and Assessment and the one in charge of Microfinance, the Justice Minister, Victor TOKPANOU, the Economy and Finance Minister, Soulé Mana LAWANI and, the Secondary, Technical and Professional Education Minister, Bernad Lani DAVO condemned what according to them is a campaign intending to misinform and mislead the people.

The Government hopes to clear the allegations over escort receipts mismanagement by this press conference and refocus the debate on the need for an objective policy about microfinance.

At the National Assembly, on Friday, January 23, 2009 an Inquiry Commission was set up to investigate the program of loans to the poor.

On Sunday, March 1, 2009 the G13 alliance also held a press conference to outline the fact that, according to them, there have been contradictions between Mr. KOUKPAKI’s statement and a letter sent earlier to the National Assembly by the Finance Minister, in which has declared the escort receipts have been serving to provide resources for the Microfinance Fund. The G13 asked for a report of an official investigation made by a body (Inspection Général d’Etat) which acts under the Head of State’s authority.