Monday August 19, 2024
Union leaders from the Federation of Somali Trade Unions (FESTU) participate in a workshop in Mogadishu on August 6, 2023, discussing labor rights and the implementation of labor laws in Somalia. (Photo Credit: FESTU)
Mogadishu (HOL) — The Federation of Somali Trade Unions (FESTU) has thrown its full support behind the Somali government's newly implemented 5% sales tax, praising it as a critical move toward fiscal transparency and national development.
Representing over 173,000 workers across 12 affiliated unions, FESTU hailed the sales tax as a major step in modernizing Somalia's tax collection system. The trade union said that the tax, which took effect on Sunday, ensures that revenues flow directly into the national treasury, bypassing intermediaries and enhancing accountability.
"A robust taxation system fosters a contract of accountability between the citizens and the government, ensuring that every payment made by the public serves its intended purpose in national development," said Omar Faruk Osman, General Secretary of FESTU. He emphasized that the tax is foundational to the functioning of state institutions and the provision of essential services like healthcare, education, and security.
The new sales tax, first introduced in 1984 and reattempted in 2018, had previously struggled with issues such as inefficiencies and lack of transparency. These problems, according to FESTU, led to a breakdown in public trust and hindered effective revenue collection. However, the 2024 Appropriation Budget Act has addressed these challenges by broadening the tax's scope and mandating direct contributions to the national treasury, a move seen as essential for avoiding bureaucratic delays and potential mismanagement.
FESTU also stressed the importance of public education and engagement in ensuring the success of the new tax system. The union called on the government to undertake civil education initiatives to inform citizens about their tax obligations and the benefits of compliance. FESTU argued this would help bridge knowledge gaps, combat misinformation, and empower citizens to hold the government accountable.
In addition, FESTU urged the government to adopt stringent measures against tax evasion, particularly targeting large businesses notorious for such practices. The union warned that tax evasion distorts economic data and deprives the country of much-needed resources, undermining national development efforts.
FESTU further called on the government to be vigilant against unscrupulous business practices that could exploit the new tax system to unfairly inflate prices. Such actions, the union warned, could not only burden ordinary citizens but also create unnecessary conflict between the public and the government.
Ahmed Osman Said, President of FESTU, reiterated the union's support for the new tax system, stating, "We believe the new sales tax system will become a cornerstone of Somalia's development and a testament to effective governance."
Introducing the 5% sales tax has been subject to controversy, particularly in Jubbaland, where local authorities have rejected the federal tax scheme. However, FESTU's endorsement provides powerful backing for the government's efforts to enhance fiscal transparency and accountability, key components in Somalia's broader push for economic and social progress.