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Shaanika warns Schlettwein against collapsing private sector

Fri, 14 July 2017 17:36
by Kelvin Chiringa
News Flash

 

Namibia Chamber of Commerce and Industry (NCCI) boss Tarah Shaanika has cautioned Finance Minister Calle Schlettwein against destroying the private sector after the latter sternly warned businesses that he would take the legal route if they fail to meet the tax amnesty deadline end of this month as government fails to recover N$4 billion worth of tax.

 

 Companies owe government a total of $19 billion dollars in accrued tax (interest and penalties included) and as a means to fast track tax revenue recovery, GRN announced that it would cut off penalties and interest leaving companies with having to pay only N$4 billion. “Taxpayers with assessed arrears were offered a respite for a write-off of 80% of combined interest and penalties and the settlement of the principal and 20 percent interest amounts over a period of six months,” said the minister.

With the deadline of 31 July now almost up, and government having only managed to fish out a paltry N$242.78 million, Calle said he will be forced to attach asserts of the indebted companies. He said the situation was unfair for government which often comes under “unrelenting” fi re from the private sector with demands that it meets its contractual obligations.  

Speaking on the current state of the economy, Calle said, “There is a worry that tax payers are not embracing the tax amnesty. Tax liability will increase; the tax man will be forced to take legal action which can be very rough.”

 

 However, Shaanika has warned that such threats and drastic action will only save to collapse the private sector which is also reeling from the effects of recession. “The issues that came to our attention as we began encouraging the private sector to pay were that some small businesses were not aware that they owe that kind of money.

Many of them had not made an effort to go and find out from the ministry. We have received some complaints that those that wanted to inquire from the ministry were somehow discouraged by the queues that were there,” he exclusively told

The Villager. In a move to save companies from having to shut down due to such drastic measures, the Namibia Chamber of Commerce and Industry (NCCI) has also chipped in by pleading with the Finance Ministry to extend the deadline of 31 July.

 “There are a lot of businesses that are experiencing a whole lot of general fi nancial squeeze in the economy. There are many businesses that are owed money for services delivered to the government which has impacted on their cash fl ow. Some of them even collapsed or went bankrupt due to their size. There is no way that the taxman can ever recover such an amount from such companies,” he said.

Shaanika further said the reasons behind this non-compliance to the amnesty are thus not deliberate and if they are to be coerced via legal action, they risk collapsing. “I think the private sector is interested to pay whatever they owe the taxman, the only challenge is that some of the companies owe so much money that if they attempt to pay the full capital amount plus the 20% on interest, they will collapse.

They can’t do that at once, so we need to approach this matter carefully so that our desire to collect as much money as possible in tax revenue does not result in shrinking the economy by killing some of the businesses,” he said.

Shaanika said the NCCI wants to engage with government, particularly the Minister of Finance in a dialogue so that both can discuss the best way forward in a manner that allows the state to continue having steady flows of income in tax revenue. However, as GRN struggles to recover the N$4 billion, Shaanika said it does not mean that the country is doing badly as far as tax revenue collection is concerned, when compared to other African economies.