Solidarity Tax temporary

13 Nov 2015 19:00pm
WINDHOEK, 13 NOV (NAMPA) - The proposed Solidarity Wealth Tax is not intended to be a permanent measure, but rather a targeted intervention in the fight against poverty and inequality in Namibia.
Minister of Finance, Calle Schlettwein announced this during a media conference on Friday.
In his Mid-Year Budget Review at the beginning of this month, Schlettwein indicated that Government plans to introduce a solidarity tax in the 2016/17 budget that would compel every income-generating citizen above a certain threshold to make a contribution towards a fund earmarked for poverty eradication.
The proposed earning of N.dollars 79 000 per annum, Schlettwein noted, was just a suggestion and point of reference for research to proceed from.
A mix of feelings received the move, with some members of society raising the concern that the measure could hurt lower and middle income-earning citizens.
Another concern that surfaced is the idea that Solidarity Wealth Tax is unnecessary and that Government should find the funds for poverty eradication by making cuts elsewhere.
Concerns have also been raised that the funds raised by the tax will constitute a handout to the poorest in Namibia.
At a media conference on Friday, Schlettwein reiterated that Solidarity Wealth Tax is not intended to be permanent.
He explained that the proposed trigger for the sunset clause is the reduction of the Gini coefficient factor to a level of 0,40.
Currently, Namibia's Gini coefficient stands at 0,60. The Gini coefficient factor is a statistical tool used to measure the unequal distribution of resources (wealth) in society.
Schlettwein said Gini is proposed as criterion since it is the simplest and easiest way to measure inequality, although other measures may be used and the modality of these are still under investigation.
Government is aware that reaction to the proposed Solidarity Wealth Tax has not been positive, with over 2 500 individuals having signed a petition opposing the proposed tax.
He indicated that although the figure represents a relatively small 0,59 per cent of individual taxpayers, the petition raises several valid concerns.
The proposed Solidarity Wealth Tax is a redistributive measure expected to address the current significant disparities in wealth, Schlettwein emphasised.
The media conference was intended to respond to the public’s reaction to the proposed tax.
Schlettwein further explained that the money collected through the Solidarity Wealth Tax will be allocated to poverty alleviation programmes that will be scaled up in the next and subsequent budgets, consistent with Government commitment that no Namibian must be left behind.