Analysis - How South Sudan could come out of economic crisis

 

stock_oil_rig_flame

Oil provides 90% of Government of South Sudan budget

(Texas USA) - New Sudan Vision has published a featured article that causes concern in me and in other Southern Sudanese. South Sudan appears to be standing on the cliff, ready to fall into the bottomless pit of economic crisis. A situation like the one that South Sudan is going through needs experts to deal with. South Sudan might not have choice in the near future but to hire experts from outside South Sudan to deal with its economic situation.

On October 28, 2008, when South Sudan was still oblivious of the coming perils, New Sudan Vision published my article, “The falling prices of oil and the desperate need for development in South Sudan: How will the government juggle them?”

In this article, I proposed buying of some tractors and other agricultural tools for agriculture as alternative to reliance on oil. I proposed that this agricultural investment must be taken down to community level so that development starts from the bottom-up instead of from the top-down.

In January this year, the government of South Sudan bought some tractors to be distributed to communities. This move motivated me to write another article entitled, “The next step in the quest to achieve food security in South Sudan.” My worry was that tractors might cost the government a lot of money and produce less benefit if there were no clear plans for the implementation of the project. Recently, I learned from a friend that those tractors are going to be useless in some areas because of the muddy soil that those tractors will not plough. This is another concern.

Now that the economic situation has already deteriorated, what will the government do to turn the situation around? My expertise is very limited in this area. However, I do have a proposal. Agricultural activities should remain as priority for the people of South Sudan. I also support the income tax that is reported to have been approved by the government (NSV, May 19, 2009).

I propose Consumption Tax as the next solution to economic crisis. I do not support the cutting of salaries, because that is going to reduce spending. Spending works well in economic if Consumption Taxes exist. You do not have to be Sudanese national to pay Consumption Tax. You pay it as long as you buy.

Here in the United States, the most important taxes on consumption are sales and excise taxes. Sales taxes usually get paid on such things as cars, clothing and movie tickets. Excise taxes, sometimes called "luxury taxes," are used by both state and Federal Governments. Examples of items subject to Federal excise taxes are heavy tires, fishing equipment, airplane tickets, gasoline, beer and liquor, firearms, and cigarettes. These are taxes that generate a lot of money each day. For example, if the population of South Sudan is 8 million, according to the recent census report, and one person pays at least $1 for Consumption Tax per a month and we multiply $1 by 8,000,000 people, we can get $8,000,000 per a month. We also have foreigners who buy in Juba; they might be 10,000 people or less. They also pay Consumption Taxes. That is another $10,000 per a month.

People do not even feel like they are paying taxes when they pay Consumption Taxes because Consumption Taxes are deducted as part of the price of what one buys. One person can even pay $100 for Consumption Tax each month if he or she buys a lot of items taxable under Consumption Tax. This is why spending helps economy in the West.

The Federal government and the state government can then divide the percentage of each item for Consumption Taxes. For example, Federal government can have 80 percent of Consumption Tax in each state and the remaining 20 percent goes to state government. States like Central Equatoria State would be the richest because of the booming business in places like Juba and Yei. Other states will now learn how to attract investors to attract their people back to their states so that consumption can increase, leading to huge Consumption Taxes. People will then pay less attention to Federal government and pay more attention to their states in solving their social problems. Both Federal government and states governments will now be able to create more jobs. Oil money would not even be the main income. States that want better security can now increase their police force and pay them to let their citizens enjoy stability to stay home and pay Consumption Taxes. This is how it works here in the West.

Countries that have better tax system become donors instead of beggars. South Sudan can become a donor within ten years if this proposal is implemented honestly. Donors do not worry about strings attached to donor money. They manage their countries according to the will of their citizens because the citizens are their donors.

The introduction of Consumption Tax in South Sudan is a good idea. It will help South Sudan become independent economically and it will also prevent money from being transported out of South Sudan like it is today.

*Zechariah Manyok Biar is a graduate student at Abilene Christian University, Texas, USA. He is pursuing a Master of Arts in Christian Ministry and a Master of Science in Social Work, specializing in Administration and Planning. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.


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