The Rainforests of Cameroon - PROFOR

50 The Rainforests of CameroonReforms in Forest TaxationUntil 1994, Cameroon’s forest taxation regime was based mainly on taxeslevied on exported logs; its chief objective was to capture revenue. Thetax regime introduced by the reform responded to the equally importantobjectives of promoting sustainable forest management, increasing localprocessing, facilitating tax collection, sharing forest rents more equitablyby widening the participation of communities, and improving governanceand transparency in the forest sector. The new taxation system wasalso designed to at least partially offset the significant reduction in fiscalrevenue expected from the ban on log exports that took effect in 2000.For a chronology of tax reform, see appendix 5.Changing the Fiscal Regime to Improve Forest ManagementTo achieve the objectives that have just been described, the new fiscalstructure (figure 3.5) relies mainly on:• Shifting the tax basis from the product (volume of timber felled, processed,and exported) to the area of the concession (in the form of acompetitively determined area tax to be paid annually regardless ofharvested volume). This shift, which made industry pay a significantprice for accessing forest resources, was expected to discourage speculationand produce predictable income streams for the state and forlocal communities that were easy to determine and collect.• Introducing a sawmill entry tax to help control timber flows and discouragewaste.• Shifting the bulk of taxation away from exports and toward timberoperations. This shift was expected to create incentives for forest management(with an increase in the number of harvested species and areduction in timber waste), marketing innovation, and increased processingefficiency.The changes in fiscal structure and the creation of the Enhanced ForestRevenue Program (Programme de Sécurisation des Recettes Forestières,PSRF) helped, along with the auctioning of harvesting rights, to maintainconsiderable fiscal revenues despite declining volumes of production andprofound changes in Delivered the ratio by of The processed World Bank wood e-library to to: logs (which changedfrom 32:68 in 1999 to 89:11 The in World 2006). Bank Revenues from area taxes roseIP : 192.86.100.34from $1.1 million (CFAF 260 Mon, million) 09 Nov 2009 in 1991–92 17:06:18 to $30.6 million (CFAF15.3 billion) in 2004. In 2005, the three main forest taxes (area tax, fellingtax, and sawmill entry tax) represented more than 88 percent of the total(c) The International Bank for Reconstruction and Development / The World Bank