MP Abdikarim Mohamed Raises Concerns Over New Tax Collection System
In a strongly worded statement, Member of Parliament Abdikarim Mohamed has raised serious concerns about the implementation of the Goods and Services Tax (GST) in Somaliland, alleging that the process is being driven by private interests rather than sound fiscal policy.
Allegations of Private Sector Influence
According to the lawmaker, the GST initiative is being backed by a group of ministers who stand to personally benefit from commission-based arrangements with private companies contracted to collect the tax. The MP claims these officials are either misunderstanding or deliberately misinterpreting existing tax laws to push forward a system that primarily serves their own financial interests.
The MP further alleges that the presidential office has already issued directives to the Ministry of Finance to proceed with this arrangement, bypassing proper legislative procedures.
Distinction Between Tax Types
Mohamed emphasizes a crucial distinction that he believes the proponents of the new system have failed to understand. He points out that the existing 5% sales tax is currently collected at customs entry points across the country. This tax, established under the Revenue Law, has been implemented at borders to avoid the administrative challenges of collecting it domestically.
The GST, however, is fundamentally different. According to the MP, GST is specifically designed as a tax on services—applying to telecommunications, electricity companies, hotels, and similar service providers. He argues that applying GST to goods and services already covered by the customs sales tax would constitute double taxation and a fundamental misunderstanding of the tax code.
Concerns About Tax Collection Infrastructure
Perhaps most significantly, Mohamed raises serious questions about the government’s capacity to collect this tax independently. He states that the administration lacks the necessary equipment and infrastructure to implement GST collection through its own agencies, which is precisely why private companies are being brought in.
“This is a pre-prepared project that has not gone through proper legislative channels,” the MP declared, arguing that the rushed implementation bypasses the transparency and debate required for such significant fiscal changes.
Economic Impact Warnings
The lawmaker warns that the new tax regime would place a heavy burden on Somaliland’s economy and business community. He expressed particular concern about the impact on vulnerable populations, suggesting that the additional tax burden would contribute to inflation and make basic goods more expensive for ordinary citizens already struggling with economic hardship.
“The tax burden will significantly impact the market and the business community of Somaliland, and will contribute to market inflation that will affect poor people whose lives are already difficult,” Mohamed stated.
Historical Context of Tax Collection
The MP provided historical context, explaining that when the 5% sales tax was first legislated, the government deliberately chose to collect it at customs points because the country was not ready for domestic collection. Similarly, he noted that other taxes like the local government tax are also collected at customs—a system designed to prevent municipalities from competing over tax collection and to ensure smooth movement of goods across districts.
Call for Legislative Process
Mohamed insists that any changes to the tax system must follow proper legislative procedures, including public consultation and parliamentary debate. He emphasized that tax policy modifications should involve discussions with the business community and consider the broader economic situation of the country.
Direct Appeal to the President
In a direct appeal to President Muse Bihi Abdi, the MP urged him to prioritize the welfare of the population over projects driven by ministerial self-interest. He reminded the President of his responsibility as the elected leader of Somaliland and warned that any project causing hardship to citizens would ultimately be his responsibility.
“Mr. President, you cannot please everyone,” Mohamed stated. “Filter out these profit-seeking projects that are a burden to society, prioritize the protection of the people and their livelihoods, and restrain your profit-seeking ministers who treat the government as a project to be exploited.”
Conclusion
The controversy highlights growing tensions between different branches of government over fiscal policy and raises questions about the transparency and economic wisdom of the proposed GST implementation. As Somaliland continues to develop its tax infrastructure, the debate over how best to balance revenue generation with economic growth and social welfare appears far from settled.
This article is based on statements made by MP Abdikarim Mohamed regarding the proposed GST implementation in Somaliland. The government has not yet issued an official response to these allegations.
