By Patience Nyangove
GOVERNMENT is owed at least N$4 billion in outstanding tax returns by businesses, the Minister of Finance, Calle Schlettwein has said.
The N$4 billion is the principal debt and if interest is to be added it might double since it has been accruing from way back when the country attained its independence 26 years ago, Confidente has been informed.
Schlettwein said Government through the Department of Inland Revenue has come up with different means to try and recover the outstanding tax returns.
The Ministry of Finance recently announced that it will issue Certificates of Good Standing to its service providers with overdue tax returns provided they enter into a payment plan with the Department of Inland Revenue. The development came almost two months after the Ministry of Finance had ordered that Government service providers were now required to submit a valid Certificate of Good Standing with the Inland Revenue Department with their invoices, for them to be paid. The move by Government -aimed at forcing a majority of its service providers that owe it money in tax returns to cough up- is said to have led to an uproar by the service providers made up mostly of small businesses and tenderpreneurs.
Schlettwein said Government had a change of heart in order not to make it too difficult for its service providers. However the Minister of Finance was quick to say that if a service provider defaults on the payment plan on outstanding taxes owed, Government will take action against them. “The total tax debt stands at around N$4 billion which is the principal debt minus interest. This figure has been ballooning since independence,” Schlettwein said Tuesday.
According to the latest Government of Namibia audited report for the period 2013 – 2014, in 2014 Treasury received N$9.5 billion in income tax from individuals, nearly N$1.7 billion more than expected while diamond mining companies only remitted N$655 million to State coffers, almost N$400 million short of the expected taxes of slightly over N$1 billion.
Non-diamond mining companies paid nearly N$2.8 billion to the State, N$1.6 billion short of the targeted remittances by Treasury while other mining companies only paid nearly N$7.5 million in company tax N$51.5 million short of the projected N$59 million.
Treasury was only paid N$130.5 million on income and profit by non-resident shareholders tax against a projected nearly N$262 million, tax on royalties amounted to N$692 million, N$654 million more than the initially projected nearly N$38 million, the annual levy on gambling amounted to N$20.8 million in tax, N$2.4 million short of the estimated N$23.2 million Treasury had anticipated to receive.
Treasury also collected over N$9 billion in Value Added Tax against a projected N$7.9 billion while nearly N$131 million went into its coffers through the levy on fuel with liquor licenses contributing almost N$10 million to revenue.
Government has been financially struggling for the better part of 2016 which forced it to slash the budget.
Barely three months after the presentation of the 2016/17 national budget, Government slashed the budget by 7.4 percent which translated to N$4.9 billion from the N$67 billion national budget. Confidente can also reveal that the Ministry of Finance has also cut the 2017/18 budget by 3.1 percent.
Schlettwein last week while presenting the mid-term budget review announced that the national operational budget is to be cut by N$2,8 billion, the development budget by N$2,7 billion, and interest payments on the national debt are to be reduced by about N$1 billion.
Schlettwein in the budget review, proposed that Government expenditure should be cut by N$4,5 billion, to around N$61,5 billion. Revenue is expected to decrease to about N$51,5 billion – leaving a budget shortfall of N$9,98 billion.
The country has been experiencing a volatile economic climate due to various macro-economic factors that include a weaker currency, low revenue from the Southern African Customs Union (SACU) and poor performance of economies of the country’s major trading partners. This has led to Government freezing the filling of any civil service vacancies this year in a bid to raise at least N$750 million needed in drought relief aid to urgently feed nearly 600 000 people. As part of stringent fiscal consolidation measures Government through the Ministry of Finance now requires ministries to formulate monthly budgets where they outline what they intend to use the requested money for before Treasury approves and subsequently releases the funds to the ministries.
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