Cameroon to Introduce Local Development Tax to Fund Public Services and Infrastructure

According to the Minister of Finance, the tax will generate an estimated 126.4 billion FCFA (roughly 200 million USD) annually for municipalities. This funding will be directed toward vital community services such as public lighting, waste management, water supply, sanitation, ambulance services, and rural electrification. The funds will be prioritized for the development of local infrastructure, aimed at enhancing the overall quality of life for citizens.

The tax, which will be deducted from employees' base salaries, will vary based on income levels. For instance, employees earning between 75,000 and 100,000 FCFA will pay an annual fee of 6,000 FCFA, while those earning between 100,001 and 125,000 FCFA will be charged 9,000 FCFA per year. The highest earners, with salaries exceeding 500,000 FCFA, will pay 30,000 FCFA annually.

New Tax Rates by Salary:

6,000 FCFA for salaries between 75,000 and 100,000 FCFA
9,000 FCFA for salaries between 100,001 and 125,000 FCFA
12,000 FCFA for salaries between 125,001 and 150,000 FCFA
15,000 FCFA for salaries between 150,001 and 200,000 FCFA
18,000 FCFA for salaries between 200,001 and 300,000 FCFA
24,000 FCFA for salaries between 250,001 and 300,000 FCFA
27,000 FCFA for salaries between 300,001 and 500,000 FCFA
30,000 FCFA for salaries above 500,000 FCFA
In addition to these salary-based levies, the tax reform also extends to businesses, with various rates based on turnover:

20,000 FCFA per year for businesses with annual revenues below 500,000 FCFA
150,000 FCFA per year for businesses with revenues between 2.5 million and 5 million FCFA
2 million FCFA per year for businesses with revenues between 30 million and 50 million FCFA
This local development tax is part of broader efforts to decentralize governance and increase the financial independence of local municipalities. It is expected to significantly increase the share of revenue allocated to local governments, with the Ministry of Finance aiming to boost local government funding from 7.3% of the state's total revenue in 2023 to 16% through this new tax scheme.

The tax will be implemented progressively, meaning that those with higher salaries will contribute more, while lower earners will pay proportionately less. This approach aims to balance the financial burden, while ensuring that municipal services can be better funded, particularly in rural and underdeveloped areas.

The introduction of the local development tax is seen as a key step in strengthening the country’s decentralization policy, giving local governments the means to manage and fund the services their communities need. As Cameroon continues to seek ways to enhance public service delivery, this initiative may well pave the way for more sustainable, localized governance.

The new tax plan is expected to be debated in the coming weeks, with Parliament's decision to follow shortly. If approved, it will mark a significant shift in how local governments are funded and managed in Cameroon, promising to bolster the nation's fiscal decentralization and, ultimately, improve the quality of life for millions of citizens across the country.