Weak economic outlook stems from decline in SACU revenue: Schlettwein

24 Oct 2018 18:50pm
WINDHOEK, 24 OCT (NAMPA) – Namibia’s weak outlook on revenue mainly stems from the continued decline in Southern African Customs Union (SACU) revenue, Minister of Finance Calle Schlettwein said Wednesday.
Speaking during the tabling of the Mid-Year Budget Review for the 2018/19 financial year, Schlettwein said the decline in SACU revenue was a result of subdued economic growth for especially the South African economy.
He said the decline in SACU revenue left a shortfall for which replacement revenue was necessary to maintain core expenditure on essential services.
“I have announced several tax policy proposals in the 2018/19 budget, with the objective of partially generating replacement revenue due to continued significant declines in SACU revenue,” Schlettwein said.
The proposals also seek to strengthen the equity and progressivity of the tax system.
The minister said the intent of Government’s tax proposals must remain to improve and stabilise the country’s revenue base, while at the same time, ensuring that the Namibian economy remains an attractive and competitive investment home, he said.
Schlettwein further said ratings agencies raised concern about the public sector wage bill which absorbs about 50 per cent of revenue, volatility of budget revenue to high reliance on SACU receipts, a narrow domestic productive and manufacturing capacity which impairs the current account balances, high inequality and high unemployment.
In this context, Government has committed to fast-tracking implementation of the announced structural reform measures, and progressive and equitable tax policy and administration reforms to boost revenue mobilisation objective.
“In this regard, we are broadening and deepening the tax base while protecting it from erosion, profit shifting and illicit flows,” Schlettwein said.
The emphasis on tax reforms will be placed on taxing foreign income of Namibian residents; trusts; phasing out of ineffective tax incentives; introducing thin capitalisation rules to combat transfer pricing on interest paid on foreign loans; and taxing the commercial income of charitable, religious, and educational institutions.
(NAMPA)
ANS/AS/ND