Mali’s tax system for forestry is inefficient because it has no scientific foundation. Indeed, the rates of tax are set without taking into account the real costs of forest management. The taxes on wood are clearly below of the real costs of forest management, which then poses problems for the renewal of Mali’s forests. The revenue generated is too derisory to meet to the needs for reinvestment, which are huge. The tax system for forestry is also inefficient, in that collection costs are somewhat higher than the amounts received. Revenue collection incurs expenses that are too onerous (the salaries of forestry personnel responsible for tax collection, operating costs etc.), which prevents efficiency. The fraudulent harvesting of wood also represents a major handicap for the efficiency of the tax system. Beyond the derisory rates of taxes, there is also widespread tax evasion, which reduces the possibilities for reinvestment in forestry.
The rules are clear in the sense that taxes are determined according to the type of zone and according to the nature of the product. However the system seems to be unfair to some stakeholders, notably the wood sellers and hauliers and the wood product retailers. Consumers also pay a heavy price under the current system, because wood is sold to them at a prohibitive price. It would be difficult for the government to increase forest revenue, because increases in the taxes on wood would automatically bring about an increase in consumer prices, which would inevitably leads to social unrest.
The evidence for this is the phenomenon observed in Mali in June 1999, when the wood harvesters went on strike due to the increase in taxes under Decree No. 98-402/P-RM, which took effect from 17 December 1998. This strike caused serious social unrest in Bamako because of the shortage of wood and charcoal which this situation brought about. It resulted in difficulties in immediately implementing the aforementioned decree. It was necessary to observe a three-month moratorium to enable the effective implementation of the legislation on the ground.
The modification of tax rates to take into account to the real costs of forest management is an unavoidable necessity if sustainable forest management is to be achieved. However, any policy to introduce more realistic prices should be supported by the following two accompanying measures:
These measures would not only allow for a reduction in the intensity of harvesting, but would also have the advantage of regulating the taxes and prices paid by consumers.
Mali’s tax system for forestry is by nature inefficient because of the low amount of taxes collected, which are derisory compared with the need for investment in forestry. The tax system for forestry is also inadequate to deal with the requirements for sustainable forest management, because Decree No. 98-402/P-RM envisages that only 30% of t he harvesting tax (in areas for guided harvesting) and 45% of the harvesting tax (in areas for controlled harvesting) would be used as the only source of revenue for forest management fund. For the years 1999 and 2000, only 14,814,875 FCFA was collected for the forest management fund, which is insignificant compared with investment requirements.
Revenue is shared with other interested parties in the sector, notably the chambers of agriculture and town councils. However, the net impact of taxes and expenditure in the forestry sector is unsustainable on the whole, because the removal of resources is not replaced by adequate reinvestment in the sector.
The tax system for forestry should be revised to take the requirements of sustainable forest management into account. This revision should comprise the three following points:
The overall level of public spending specifically intended for sustainable forest management is too low and is insignificant with regard to the need for investment in forests and because of the necessity and urgency to maintain the ecological balance in forests.
In particular, the level of public spending on sustainable forest management is a major concern in the following areas: the training of forestry personnel and the general population; the basic work of forest maintenance (e.g. firebreaks); and the preparation of forest management projects. In addition, the least financed but most important aspect of forestry at the moment is the need for reforestation to accelerate the process of forest renewal.
The two most critical problems that restrict financial support from the public sector are as follows:
It is thus important to adopt the following measures:
The impact of grants and subsidies managed by companies, individuals and NGOs has been reduced because of the different and often contradictory approaches used by donors in their various activities. In addition, the interventions of NGOs on the ground are often carried-out without co-ordination or consultation with the government which, in many cases, leads to a waste of financial resources.
In order to optimise the impact of grants and subsidies, a framework for co-ordination between donors and government forestry institutions should be established to achieve better coordination of activities in the field.
It would be interesting to explore the possibility of using the taxes on forest clearance to fund sustainable forest management. Furthermore, the subsidies allocated to agriculture could be used in part to support sustainable forest management through the development of agroforestry.
The Government of Mali is resolutely committed to support the forestry sector through the implementation of laws and regulations regarding the protection and sustainable management of forest resources. Every day it invests in the search for foreign investment in sustainable forest management. The existence of a number of forestry projects in Mali eloquently illustrates the interest that the government takes in sustainable forest management. This interest is also confirmed by the fact that the protection of the environment holds an important place in Mali’s constitution.
Significant efforts have been made by the state to improve the financing of sustainable forest management in the state budget. However, the amounts allocated are still insufficient compared with the need for forestry investment. Recruitment of forestry personnel also takes place every year to bridge the gap in staff shortages.
Important efforts are still to be made by the state, especially in relation to the revision of taxes on harvesting forest resources, which should be modified to take into account the real costs of forest management. But a positive sign is that the government drafted and implemented the Domestic Energy Strategy with the backing of the World Bank. This strategy aims to arrive at a correct value of woodfuel production and the introduction of rational harvesting measures.
It seems likely that the state would view favourably the reform of fiscal policies in the forestry sector leading to an increase in the contribution of domestic resources to finance sustainable forest management.
