The development (determination) of forest charges is not carried out by a single ministry or agency. In stead, consultation and dialogue is used to set forest charges in a process that is open-ended and, to some extent, transparent. The ultimate responsibility for setting forest charges lies with the MOF and FDA, but they are always supported by an inter-sectoral and interdisciplinary committee. In addition to the MOF and FDA, this committee usually consists of experts in finance, law, economics, forestry and management. It also usually involves consultants and the participation of representative(s) of logging companies.
For instance, there is currently a Presidential Economic Management and Finance Commission (EMFC). A sub-committee of this Commission was recently established for the forestry sector and asked to examine the restructuring of existing forest charges, based on claims from the logging companies about currently depressed world market prices for logs and processed forest products. The sub-committee recommended a 30 percent reduction in all forest harvesting charges, including the land rental tax but excluding the processed forest product charges (Forest Products Fee). The recommended reduction is currently pending implementation.
After it has been decided to change the forest charges, a regulation is produced, published in the print media and made publicly available prior to enforcement. The FDA then enforces the new charges through the appropriate regulations.
In Liberia, forest charges are not based on a fixed formula and are not updated each year. However, they should be regularly updated, based on fluctuations in world market prices and domestic production costs (in order to allow a reasonable profit margin for logging companies). The historical trends in all forest charges are shown in Table 15 below:
Table 15 History of forest charges from 1979 to 1988
|
Year |
Charges and rates (in USD) |
||||||||
|
Severance Fee (per m3) |
Reforestation Fee (per m3) |
Conservation Fee (per m3) |
Forest Research Fee (per m3) |
IIF (per m3) |
Forest Products Fee (per m3) |
Land Rental Fee (per month) |
|||
|
A |
B |
||||||||
|
(per acre) |
(per ha) |
||||||||
|
1979 |
1.50 |
3.00 |
n.a. |
n.a. |
n.a. |
2.00-75.00 |
1.00-60.00 |
0.10 |
0.25 |
|
1981 |
1.50 |
3.00 |
n.a. |
n.a. |
n.a. |
2.00-75.00 |
1.00-60.00 |
0.10 |
0.25 |
|
1982 |
1.50 |
3.00 |
n.a. |
n.a. |
n.a. |
2.00-75.00 |
1.00-51.00 |
0.10 |
0.25 |
|
1984 |
1.50 |
3.00 |
n.a. |
n.a. |
n.a. |
1.20-48.80 |
0.40-30.60 |
0.10 |
0.25 |
|
1986 |
1.50 |
3.00 |
3.00 |
1.50 |
n.a. |
1.20-48.80 |
0.40-30.60 |
0.25 |
0.42 |
|
1988 |
1.50 |
3.00 |
3.00 |
1.50 |
n.a. |
1.44-58.56 |
0.40-30.60 |
0.25 |
0.42 |
|
1998 |
1.50 |
5.00 |
4.00 |
2.50 |
1.00 |
1.44-58.56 |
0.40-30.60 |
0.50 |
n.a. |
The MOF and FDA are the only government agencies involved in the collection of forest charges. Production monitoring, calculation of forest charges and the generation of forest production statistics is the sole responsibility of the FDA. Both the FDA and MOF receive payments of forest charges (depending on the type of charge).
Forest charges are mainly assessed at mill sites. Scalers work directly with companies to record the volumes of roundwood and processed forest products that have been produced and to grade the products for the calculation of charges. The regional forestry administrators (i.e. district foresters, production forest officers and regional foresters (principal officers)) check the scalers work to ascertain the accuracy of the production volumes recorded on the prescribed forms (see Annex 2 to Annex 5). Furthermore, an inspection team from the Forest Inspectorate Section (located at Headquarters) is frequently sent to the regions to reconcile production records and investigate potential problems.
The calculation of forest charges starts with the recording and reconciliation of production volumes. Production volumes are recorded on a number of prescribed forms. The first form is the “Tally Sheet” (TS), which is used to record production in the field (see Annex 2). The Severance Fee Tally Sheet shows the volume of production calculated from the whole tree length (i.e. before cross-cutting). A similar Tally Sheet is used for Exports (the Export Tally Sheet), except that this only records the volume of logs designated for exports (i.e. after cross-cutting and grading, etc.).
The second form that is used is the Monthly Production Summary Sheet (MPSS). Two versions of this are used. The first (see Annex 3) is detailed and records the number of logs produced per species and severance rate, the number of logs designated for export according to species and IIF rate, the number of logs produced per species and conservation class and the Tally Sheet numbers where the original data is recorded (the Tally Sheets should be attached to this form). The second (see Annex 4) presents the aggregated data, including the total designated export volumes and rates and the total severance volumes and rates.
The final form is the Waybill (WB), which must accompany the roundwood on the trucks from the field to the sawmill (Local Log Waybill) or port (Export Log Waybill). An example of a Waybill form is given in Annex 5.
The FDA assesses all charges and invoices companies for forest charges. At the regional level, the MPSS (summarising the data from the TS) are used to calculate the total amount of forest revenue due from each concessionaire. At the end of each month, all of this information is sent by the regional foresters to the Billing Unit at Headquarters and bills are produced and sent to each concessionaire (see Annex 6). The source documents (e.g. MPSS) are always attached to the bills to enable the companies to check that their bills are correct.
Active companies pay charges by cheque and deposit their charges in designated FDA and MOF accounts at appropriate banks.[1] Then they deliver their official receipts to the Deputy Minister of Revenue at the MOF and the Financial Comptroller at the FDA Headquarters. A 15-day period after invoicing is allowed for payment.
It should also be noted that a compulsory payment of USD 40,000 is required as an initial payment of forest charges. This must be made before a company starts harvesting. This amount is reduced as production commences and companies are not billed for forest charges until it has been exhausted.
Table 16 Comparison of roundwood production and export volumes in 1996 to 2000
|
Year |
Production volume (in m3) |
Export volume |
Proportion of production |
|
1996 |
28,739 |
24,157 |
84% |
|
1997 |
74,976 |
49,463 |
66% |
|
1998 |
157,098 |
80,646 |
51% |
|
1999 |
353,343 |
189,940 |
57% |
|
Total |
614,155 |
344,206 |
56% |
Although most payments are made by cheque and a deposit of charges is required (see above), the collection process is not very effective. To some extent there is a problem of inaccurate reporting and recording of production volumes, which leads to charge evasion. For example, the evasion of charges can be seen when roundwood production and export volumes are compared. Table 16 shows that exports accounted for only 56 percent of total roundwood production (on average) from 1996 to 2000. Given the absence of efficient and adequate processing facilities in Liberia, this is simply not possible. At the moment, the capacity of local sawmills is not sufficient to absorb the remaining 44 percent of production, so it can be concluded that some export volumes are not recorded as exports and the correct forest charges are not paid.
A solution to this problem would be to improve the salaries, incentives and transport arrangements available to forest scalers and technicians. Currently, a scaler receives an average net monthly salary of only L$ 600 (equivalent to USD 15 per month), which is totally inadequate. There is urgent need to strengthen field services to encourage efficiency, honesty and productivity.
The FDA is responsible for controlling, supervising and monitoring forest operations. The TS, MPSS and WB are used to monitor production and assess charges. In addition to these, there are a number of other important technical control mechanisms that are used to ensure sustainable management of the forest resource. These are included in the forest management plans and include the following:
Annual coupe: concessionaires may only harvest four percent of their total forest concession area in each year. This requirement is based on an assumption that a 25-year harvesting cycle will allow the standing volume in the remaining forest to recover from harvesting.
Minimum diameter cutting limit per species: this requirement forbids the harvesting of trees below a certain minimum diameter, which varies from species to species (see Annex 7). Again, this is to support the production of the next tree crop, by protecting the trees remaining in the forest after harvesting.
Both of these measures are supported by the imposition of fines and penalties if they are violated (see Table 14).
The FDA exclusively does the monitoring and assessment of forest production volume. The mechanism for forest charge payment is well designed. Executive Order No. 4 dated June 22, 2000 stipulates arrangement between the MOF and FDA (annex 9).
The linkages between administrative processes involved in revenue collection are well documented in the Executive Order No. 4 (annex 8). The generation and assessment of primary statistics of forest production and utilization is the exclusive responsibility of the FDA.
Liberia is a unitary state and county administration is supervised from the capital. All forest charges are paid in Monrovia. The regions offices of the FDA exist primarily to monitor and supervise activities of the logging companies and are not empowered in any way to collect forest charges.
[1] Although companies are normally required to pay their charges by cheque, cash payment is sometimes allowed.
