In their report on the failure to fulfil other legal and regulatory requirements, Auditors discovered that some Local Councils are in arrears of Le1.37 billion (Le1,372,377,497.24) in statutory deductions.
Section 130(1) of the Income Tax Act of 2000 stipulates that: “Any tax that has been withheld or should have been withheld by a withholding agent shall be paid by such agent to the Commissioner within fifteen days of the end of the month in which it was or should have been withheld”.
Withholding taxes which totalled Le944 million (Le944,722,451.24) were deducted/not deducted from suppliers’ payments from own-source revenue or the devolved sector activities, were not paid to the National Revenue Authority (NRA).
Withholding Taxes were not paid by the following Councils, Freetown City, Falaba District, Port Loko District, Port Loko City, Makeni City, Koinadugu District, Karene District and Moyamba District.
“Failure to pay withholding tax will attract penalties that may eventually affect the implementation of the activities of the Council, since the penalty was not budgeted for” the Auditor General said.
Staff NASSIT contributions of Le26,334,000 were not paid by the Bonthe District, Western Area Rural District and Kambia District Councils.
Under Section 25 of the NASSIT Act of 2001, the Council is obligated to pay NASSIT contributions that have been withheld within fifteen days of the end of the month, in which it was or should have been withheld. Failure to pay NASSIT contributions increases the risk of penalty of the Council.
Similarly, deductions and payments of Pay-As-You-Earn (PAYE) Tax was not paid by the Freetown City Council. Section 116 of the Consolidated Income Tax Act of 2008 mandates the withholding of tax by employers at source. The audit revealed that the Council failed to withhold PAYE tax on employment income totalling Le401,321,046.
The Auditor General further noted that, in spite of their sustained and persistent recommendations over the years, local councils have still not developed guidelines for the payment of sitting fees and allowances to councillors. “Councils are not only neglecting the implementation of our recommendations; but are also in material breach of Section 30(2) of the Local Government Act of 2004.”
Additionally, during the course of the year to 31st December 2019, the sum of Le362,720,000 (Le460,930,000 in 2018) was paid as sitting fees and other allowances to Councillors, who were either absent from the meeting or no evidence of meeting held and to which the payments related.
“We continue to recommend a refund of these payments into the Consolidated Fund and that in future, payment should only be made to councillors who attend council meetings as stipulated by the provisions in the Local Government Act of 2004” the Auditor General said.
Bombali District, Falaba District, Makeni City, Karene District, Bo District, Moyamba District, Bonthe Municipal, Koidu New Sembehun City, Freetown City and Western Area Rural District Councils all defaulted in paying sitting fees and other allowances to Councillors, who were absent from the meeting.