The_Open_Door_deel1

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Lastly, the fiscal obligations of the company. Besides an
income tax holiday of 5 years and loss carry forward privileges
(among other incentives granted) Columbia was granted such
privileges that this part of the_concession agreement alone
could already have justified the National Legislature to
withhold its approval (the concession agreement was approved
by the Legislature on December 19, 1956).
The definition of the company's "Operating Income" already
provided Columbia with a loophole by allowing for the use of
"the current contract market price" and for a deduction for a
"reasonable profit". Furthermore, the U.S.-company was allowed
the following deductions before arriving at the taxable income
(50? of which had to be paid to the Government as income taxes):
(i) the amortization of loans (whereas no debt/equity ratio had
been included): (2) the prospecting, exploration and development
expenses as incurred during the taxable year; (3) the amortization
of exploration expenses as well as depreciation of machinery,
equipment, buildings, etc.; (4) reasonable reserves for
replacement, expansion, development, and contingencies; and (5)
charges, tolls, fees, duties and taxes paid to the Government (66).
The deductions mentioned under(2) and (3) above could have
resulted in duplication, and through the deductable reserves
mentioned under (4), in combination with the deductions allowed
under (2) and/or (3), the Liberian Government would bear 100? of
the costs of capital goods, at the prevailing tax rate of 50?
(if the company were to sell these capital goods, the proceeds
of these sales would be tax-free).
Another loophole which was created: as the only tax which
Columbia would have paid would have been an income tax, and as
it was allowed to deduct the payment of (income) taxes in one
year from the taxable income in the next, the effective
income tax rate could have been only 25?. The lack of a debt/
equity ratio combined with the possibility of deducting
repayments of loans taken from outside from the taxable income
(a practice which, as will be seen, led to a considerable loss
of revenue for the Government from iron ore mining companies
which had been granted this, as well as other above-mentioned
privileges) would have decreased the Liberian revenue even
further.
Amazingly, no words of protest were voiced against these terms
which obviously were prejudicial to the interest of the country.
One explanation for this might have been that any criticism of
the decisions of the President was automatically labelled
"subversive", "defamation of character" or "hostility to the
State", especially so after the 1955 attempt to assassinate
President Tubman. The "reign of terror", which accompanied the
trial of the accused, continued after the verdict had been
rendered. From that time on, Liberians competed in making
flattering public statements on President Tubman and, according
to them, his wise policies which had benefitted so much the
country and its people.