In its bid to increase revenues in the national coffers, government says it is considering to increase the amount of tax on consumer goods and adjust various taxes, levies and charges on permits and licenses, a move which is highly likely to increase inflation and put more pressure on consumers’ disposable income.
Delivering the 2017/2018 national budget proposals in parliament last Monday, the Minister of Finance and Economic Development Kenneth Matambo indicated that in an attempt to increase government revenue base his ministry is considering proposals by the Taxation Review Committee which include adjusting various taxes, levies, charges on permits and licenses and reviewing some VAT exemptions. According to the minister, government is also considering amending VAT Act to include sale of property by a Deputy Sheriff as a taxable income.
Matambo added that to curb the loss of government revenues due to tax dodging his ministry was also considering introducing transfer pricing rules in the Income Tax Act. Botswana has been ranked among countries which loses more revenues due to tax evasion and income tax laws which facilitates tax dodging.
He indicated that there was an urgent need to increase government revenues following the declining mineral revenues and projected budget deficits. “Customs and Excise revenues, specifically SACU revenues have for a long time been our second largest source of revenue after diamonds, but these have of late been fluctuating due to performance of imports within SACU region. With mineral revenues declining and those from SACU being volatile, there is therefore an urgent need to diversify our revenue base towards more sustainable and reliable sources,” he said.
2017/2018 total government revenues and grants estimate amounts to P57.19 billion while total expenditure and net lending is estimated at P59.54 billion, resulting with a projected budget deficit of P2.35 billion. Mineral revenue is estimated at P16.33 billion while non-mineral income tax is estimated at P12.35 billion of total revenues and grants. VAT collection is expected to reach P8.11 billion while the remaining balance of P3.34 billion is expected to be made up of other revenues and grants.
Matambo added that in addition to reviewing levies, charges on tax, permits and licenses during the 2017/2018 financial year, government is expected to develop Tax Administration Act to improve tax administration efficiency and the project is envisaged to be completed in the next financial year.