**5.1.5 Inefficient tax system**

Poor or mistaken tax policies have created obstacles to the sustainable management of forests in Cameroon [and DRC] (Sikod et al., 1996). In an effort to resolve the issue of market failure, the government of Cameroon under the 1994 forest policy embarked on reforming the forestry taxation system, output targets, regulation, private incentives and macroeconomic management, using policy instruments such as royalty12 for the forest area, felling tax, exit duty on logs, and factory taxes.13 These policy interventions have instead created controversies which have contributed to more deforestation in some areas. For example, the lack of concrete modalities for handling tax revenues and rents from royalties

<sup>12</sup> Royalties are "rents" not "taxes," but are placed under tax regulations to ensure that concessionaires pay for the right to access the resource.

<sup>13</sup> Exit duty on sawn products and entry taxes on logs taken into factories.

notably:

game...



scientific benefits:

information

Not only are services provided by the forests in the Congo Basin not traded in markets but charges paid by timber concessionaires in the region are relatively low compared to the market value of the resource (Fomété, 2001). These low charges are encouraging foreign timber companies especially from countries with rapidly growing economies like China to aggressively seek concessions here. In fact, the Chinese company Vicwood-Thanry which began exploring Cameroon's forest in 1997 now owns 12% of foreign-owned concessions in Cameroon (Topa et al., 2009). There is also the lack of incentive for long term management due to logging competition among the many concessionaires. High profits due to low charges are also potential drivers of corruption that has handicapped strict enforcement of

Poor or mistaken tax policies have created obstacles to the sustainable management of forests in Cameroon [and DRC] (Sikod et al., 1996). In an effort to resolve the issue of market failure, the government of Cameroon under the 1994 forest policy embarked on reforming the forestry taxation system, output targets, regulation, private incentives and macroeconomic management, using policy instruments such as royalty12 for the forest area, felling tax, exit duty on logs, and factory taxes.13 These policy interventions have instead created controversies which have contributed to more deforestation in some areas. For example, the lack of concrete modalities for handling tax revenues and rents from royalties

12 Royalties are "rents" not "taxes," but are placed under tax regulations to ensure that concessionaires

13 Exit duty on sawn products and entry taxes on logs taken into factories.



The forest provides basic resources,

The forest provides esthetic, cultural and





**Regulatory functions Productive functions**

**Physical support functions Informational functions**

Table 2. Categories of Environmental Services Provided by Forests

The forest provides support to economic

activities and human well-being by:


The forest provides the space and re-



quired substrates for:


concession terms (Sieböck, 2002).

pay for the right to access the resource.

**5.1.5 Inefficient tax system** 

Source: Lescuyer et al., 2009

Waste


Another problem with the forest taxation system of these countries is lack of transparency. There is little or no flow of information between the different stakeholders. Most forest inhabitants in both countries are illiterate. The few who can barely read and write find it difficult to interpret policy documents. This is a huge limitation which, coupled with the lack of adequate information to estimate their expected revenue, causes inhabitants to fall prey to the greedy loggers and government official imposters. An even more serious problem with the forestry taxation system of these countries is that though it claims to be a decentralized system, both governments still place strong emphasis on centralized decisionmaking, ownership and control of forest resources. In Cameroon for example, the creation of community forests under the 1995 forestry law was aimed at giving complete autonomy for managing the forests to the communities themselves. However, communities are still unable to fully control the management process as local, national and regional government representatives sit in management committees and impose government directives on community leaders (Assembe, 2006; Mbatu, 2010). This has caused the local population not to cooperate with the government in managing the forests. These centralized decision-making policies have been partly responsible for failures to protect forests and for its extensive loss and degradation in Cameroon. The decentralization of forest management in Cameroon was meant to act as a model for the Central African region but in many ways has fallen short of the desired prototype. Though not a prototype of an ideal decentralized management system, the model has been adopted by some countries in the region including DRC which adopted a new forestry law in 2002 and passed a new constitution in 2006 (Government of DRC, 2006) in a move aimed at empowering communities to take control over the management of local forests. Although the 2006 constitution "stipulates that taxes are to be collected by decentralized autonomous local governments (Government of DRC, 2006), all forests-related taxes are [still] been paid directly to the national Treasury" (Klaver, 2009).
