Government to introduce Solidarity Tax by 2016/17 Financial Year

04 Nov 2015 11:00am
WINDHOEK, 04 NOV (NAMPA) – The Government is investigating the feasibility of introducing a solidarity tax by the 2016/17 financial year.
The tax will be payable by all individuals in the tax-paying income bracket and all registered companies as a citizens’ response to the national fight against poverty, Minister of Finance Calle Schlettwein said during his Mid-Year Budget Review here on Tuesday.
“We need to introduce a solidarity tax as a progressive withholding tax on income and establish a fund for the administration of the proceeds to support targeted activities for poverty reduction,” Schlettwein said.
He explained that the average per capita income for Namibia was used as indicative threshold to determine who should contribute and who should benefit from this tax.
“An income above the average per capita income (US.dollars 5 700, or about N.dollars 78 000) is to contribute, whereas those with incomes below that may benefit,” the minister said.
An estimated N.dollars 600 million per year will be raised by way of the solidarity tax. Schlettwein further said the Export Levy Bill that will introduce taxation to promote domestic value-addition and processing of raw materials in primary commodity and natural resources will be tabled in Parliament soon.
He added that during the next Parliament session, he will also table the introduced legislation for the implementation of the first phase of environmental taxes on carbon dioxide emission on motor vehicles, incandescent light bulbs and motor vehicle tyres as announced last year.
“Tax policy should increasingly contribute to revenue raising and the attainment of socio-economic objectives, while tax administration reforms should increasingly improve the yield and buoyancy of the revenue streams,” he said.
Schlettwein stressed that in the next Medium-Term Expenditure Framework (MTEF), the government will further implement reforms in both tax policy and administration by introducing taxation of the informal business sector, based on presumptive tax principles.
Presumptive tax is a form of income tax based on average income instead of actual income. It is used to deal with incomes or activities that are hard to tax, such as businesses in the informal sector.
Government will implement a programme for targeted recovery of tax arrears for different categories of tax and non-tax revenues; and formulate Double Taxation Agreement (DTA) Policy and Model DTA aimed at promoting international trade for Namibia.
“I am grateful for the support from the House on the Income Tax and Value Added Tax (VAT) Amendment Bills. We will launch the Integrated Tax System next year and table the Namibia Revenue Agency Bill to pave the way for the establishment of the Revenue Agency of Namibia,” Schlettwein said.