The Rainforests of Cameroon - PROFOR

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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
Objectives and Content of the Reforms 51Figure 3.5. Changes in the forestry tax structure100908070Percent60504030201001991/921993/94 1995/96 1997/98 1999/2000 2001/02 2004 2005Export dutiesArea tax (RFA)Felling taxSawmill entry taxOther taxesSource: Authors, based on data from PSRF and MINFOF.forest tax burden, and the export tax represented about 10 percent. Thedecline in revenues between 1997/98 5 and 2005 (figure 3.6) appears modest,considering that over the same period commercial harvests declined bymore than 32 percent, from 3.4 to 2.3 million cubic meters.Guarantee System to Secure Fiscal and Environmental PerformanceThe 1994 Forest Law included a provision to secure compliance with fiscaland environmental commitments through a guarantee system. Whenawarded a concession, a firm would provide a guarantee bond equal tothe amount of the annual area tax. If a company failed to meet its fiscal orenvironmental obligations, the Treasury would activate the guarantee andrecover the equivalent of the unpaid sum. Despite the system’s simplicityand potential to positively influence companies’ behavior, the Treasuryhas not activated the guarantee even in cases of well-documented illegallogging. Most companies Delivered paid by The the World area Bank tax e-library regularly, to: and the guaranteecreated a financial burden and The reduced World Bank the ability to obtain credit. A fewIP : 192.86.100.34well-connected companies Mon, were 09 Nov able 2009 to 17:06:18 delay posting bank guaranteesuntil public opinion placed sufficient pressure on the Ministry of Finance.To sum up, it was a good idea, but it did not work as planned.(c) The International Bank for Reconstruction and Development / The World Bank
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The Rainforests of CameroonDelivere
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© 2009 The International Bank for
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vi ContentsChapter 3 Objectives and
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viii ContentsFigures3.1. Cameroon
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x Forewordof illegal activity. Oppo
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xii Preface and AcknowledgmentsIt i
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Delivered by The World Bank e-libra
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xvi AbbreviationsCOMIFAC Conference
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132 Appendix 1resulted in paper ref
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134 Appendix 1estry laws and regula
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136 Appendix 2FMU numberFMUs alloca
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138 Appendix 2FMU number10.020 1038
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140 Appendix 2FMU number09.020 1069
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144 Appendix 3Type Name (type) Area
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146 Appendix 4Small-scale domestic
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148 Appendix 5The September 1997 ag
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152 Appendix 6Code in 1994 and an E
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154 Appendix 6• The Vienna Conven
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156 Appendix 6Forestry taxation ref
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158 Appendix 6to CFAF 10 billion of
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160 Appendix 6Sangha National Park)
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162 Appendix 62. Better environment
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166 Appendix 71998-99 2002-03 Evolu
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168 Appendix 71998-99 2002-03 Evolu
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170 Appendix 8Type of Processing ca
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172 Appendix 8Type of Processing ca
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176 Appendix 9Situation in 1992Area
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178 Appendix 9Situation in 2004Fisc
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182 Appendix 10forest service (or t
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184 ReferencesCarret, Giraud, and L
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186 Referencessented at the Rights
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190 The Rainforests of CameroonCons
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192 The Rainforests of CameroonIPDP
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194 The Rainforests of Cameroonvolu
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ECO-AUDITEnvironmental Benefits Sta
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Map 2. Forest Use in Cameroon, 1992
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Map 3. Status of Logging Titles in
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Map 5. Status of Protected Areas in
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Map 6. Conservation of the Ngoila-M
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