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Analysis

Fiscal Regimes

There are two main types of fiscal system, which can be broadly differentiated between the four African countries and Peru where the state controls all forest resources and redistributes royalties and fees (such as land rentals) collected from companies holding forestry concessions, and Ecuador and Guatemala where communities and individuals own forest areas and the state administers schemes to incentivise particular land uses.

In countries where there are forestry royalty systems, although the authorities have clarified the proportions of royalties and fees collected that are intended to be distributed to different groups, such as district assemblies and local communities, common problems have been a lack of comprehensive, timely and well-disseminated information on the actual amounts due from companies, collected and redistributed by the state, and invested in community projects. There has been some progress over the course of the Making the Forest Sector Transparent programme, for example the forest authority in Ghana has improved its performance in releasing data every six months (although it has resisted attempts by CIKOD to disseminate it).

The most significant development in 2011 was the formal constitution and regulation for the National Benefit Sharing Trust in Liberia, which provides a framework with clear systems and representation, but substantial funds remain to be distributed despite a tracking system in place to monitor them. Lack of transparent decision-making within communities about where and how funds are used is another concern. In Cameroon there have been some improvement in terms of representation of community members in committees responsible for investments in local projects, and in Ghana CIKOD is developing a transparency charter for traditional authorities to improve their accountability. Greater support is needed in Liberia to ensure that Community Forest Development Committees are able to administer their funds properly.

Beside royalties' distribution, social responsibility agreements directly between companies and communities are also important in the African countries, but they are often subject to even less transparent information and decision-making. In Liberia attempts to get the authority to intercede in re-negotiating these agreements started to gain some movement in 2011.

In Ecuador and Guatemala forestry programmes for landowners, including rural communities are publicly funded by state taxation of extra-sectoral activities. Information on the Socio-Bosque programme in Ecuador, which pays incentives to landowners to conserve forests on their land, is readily available to the public. Insecure land title can act as a barrier to accessing this programme, however. A similar problem has affected the forestry incentives programme in Guatemala, which was set up to support rural livelihoods including a target that 50% of beneficiaries would be relatively small landowners. In practice information has been limited for assessing whether the incentives were actually reaching marginalised groups and the total amounts distributed were less than proposed. Following a campaign by civil society, an important step forward was the passing of the law in November 2010 to implement an incentives programme targeted at rural communities and smallholders, which has fewer requirements in terms of formal community land tenure. Guatemala also provides a striking example of where general public taxation and expenditure is markedly lower than in other comparable countries and translates into a very small and inadequate budget for forest authorities.

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