Schlettwein talks tough on taxes
Government will this year start implementation of a tax regime meant to force local investors both local and international to value add on local raw materials.
The move is among a raft of measures that Government is to introduce to improve both revenue inflows and also encourage local companies to abide by environmentally friendly production processes and also employment creation.
Among the taxes to be instituted this year are environmental tax on carbon dioxide emission meant to curb pollution, increasing of the value added threshold from N$200 00 to N$500 000 for large corporates and inclusive of volunteering small to medium entities and tax on transfer duty for the sale of shares in closed corporations.
While it is not yet clear whether the idea to introduce different taxes is part of Government’s move to improve revenue it is proving treasury’s seriousness on diversifying revenue sources instead of relying on the ever dwindling South African Customs Union income.
Commenting on the planned tax introductions Minister of Finance Calle Schlettwein told The Villager the Government is looking at avenues of improving productivity, employment creation and also encourage companies to reinvest locally to benefit the economy.
“Taxes on exported raw materials is too low due to fact there is no value added to them. It will come with the ability to add more value on our products, the value share will have to increase.
“We get very little revenue from the raw materials that we export. But if we can add more value to our raw materials that we export then we will be able to get better revenue, and if we cannot add value on our low materials at least we should be able to increase the revenue on them, as some of these low materials are very difficult to add value on. The international market is very complicated and it might be hard to add value on some of our raw materials,” Schlettwein said.
Schlettwein added that, “The first step of the implementation will start this year. The aim is to improve our ability to collect tax. It will help us to successfully administer Tax laws. We are busy with the preparation of the implementation of this agency, as it will have legal views because it will cover many activities that have to be done.”
He also argued that Value addition will require infrastructure development.
“The Value-Added Tax (VAT) threshold that will be increased will help us to improve our ability to administer tax collection. It will mainly focus on big companies, but we have put up the voluntary registrations for our small business owners to be able to part of it,” he said.
Meanwhile a Institute of Public Policy Research (IPPR) in their publication the Democracy Report released at the end of May argue that there is need for the Government to also find a way of pushing the mining companies to pay both taxes of all kinds and royalties if the country is to accrue results from their diversification of revenue sources.
The report also stated that among the taxes on income and profit income tax on individuals represents the largest single component. “From this source, Government expects to raise N$15.2billion in 2015/16. This is a major step up from the N$8.1billion collected three years ago, and speaks to the major improvements seen in the Inland Revenue department over this period,” reads the IPPR report.
The report also stated that the second largest component of taxes on income and profits is company taxes, which according to the report, represent approximately 37% of the sub category.
The mining company tax revenue with the exception of diamond mining, was too low in 2014/15 and it is expected to be low in 2014/15. About N$27.5million has been collected in 2014/15 and it is expected that to register N$57.5million in 2015/16, with non-diamond mining companies represent just 0.4%.
“In the current budget year, expenditure is expected to increase by 11.6% when compared to the previous year, taking the total to N$67.1billion. This is an increase of 4.7% when compared to the previous year’s forecast for the rest of the current financial year,” reads the IPPR report.
by Jona Musheko