By: Nghiinomenwa Erastus
In a move to cut the country’s carbon footprint and explore further income avenues, the finance ministry is contemplating taxing electrical geysers.
The Minister of Finance, Iipumbu Shiimi, announced the potential move during his mid-year budget review as part of his policy considerations in tax policy and tax administration reforms over the upcoming Medium-Term Expenditure Framework (MTEF).
Shiimi said his team would explore “imposing a carbon tax on electrical geysers as a means to encourage broad-based adoption of solar geysers to contribute to net-zero targets on climate change”.
The current MTEF has highlighted that due to slack performance of revenue and weak economic performance, the government will weigh on expenditure by returning to pre-COVID-19 trends.
However, it will further implement reforms aimed at reviving the economy, explore the alternative source of revenue, reverse
the increase in the budget deficit and stabilize debt stock.
Another tax proposal that Shiimi and the team are still exploring is reducing the non-mining company tax, considering effecting it in the outer years of the next MTEF.
He updated that the income tax amendment bill is at the initial stages of ministerial approval. It contains the proposed introduction of a withholding tax at 10% on dividends paid to Namibians.
Secondly, there is a proposal to increase the deductibility on pension fund contributions and educational policy deductions to a maximum of N$150 000.
It also enforces the administration of withholding tax on services by requiring taxpayers to provide proof of actual tax withheld from payments.
The Bill will undergo public consultations for inputs, after which it is anticipated to be tabled in the National Assembly during the next session,
While the update on the value-added tax amendment bill is also at the initial stages of ministerial approval, incorporating zero-rating the supply of sanitary pads.
Furthermore, it includes the extension of the VAT charges on the fees of all asset managers to ensure fairness of the tax system.
The Bill will make rounds of stakeholder consultations and is anticipated to be tabled in the National Assembly in 2022.
Shiimi also told the market that they would be open-minded on touching businesses and households’ income.
“I should hasten to say that Government approaches tax amendments with an open mind,” he said.
Adding that, should the consultations process prove that some of the proposed amendments could be harmful to the socio-economic wellbeing of Namibia, we will reconsider our position accordingly.
The Namibia Revenue Agency (NamRA), officially launched on 7 April 2021, has ceased establishing its corporate identity, including crafting operational policies and finalizing staff recruitment and transfers.
Further, NamRA is instituting administrative mechanisms to ensure that the freight tax provision in the law is fully complied with.
The MTEF indicates that government revenue remained subdued, with the SACU receipts for 2021/22 estimated to decline by about N$7,5 billion to about N$14,8 billion, from N$22,6 billion in the FY2020/21.
Total government revenue for FY2021/22 is revised upward by about 2,9 per cent from N$52 billion in the budget to N$53,6 billion.
In FY2022/23, total revenue is projected to remain flat at N$53,9 billion
In the future, revenue is estimated to remain volatile, with an anticipated recovery towards the end of the MTEF.
Compared to last year (FY2020/21), revenue and grants, recorded at N$57,8 billion, representing a decrease of one per cent compared to N$58,4 billion realized in FY2019/120.
The decrease in revenue for last year was recorded in the main tax categories of income tax on individuals that decreased by 2,7%. VAT fell by 24. per cent, other taxes on income and profits shrank by 23,2%.
While withholding tax on interest decreased by 18,1%, other taxes income categories fell by 10,6% per cent.
The revenue outlook is expected to remain weak over the medium term owing to weak economic performance due to the impacts of the Covid-19 pandemic, sluggish domestic demand.
Furthermore, low commodity prices in the global market are projected to make headway only toward FY2024/25. Email: firstname.lastname@example.org