By Hilary Mare
INCOME tax brackets in which lower income earners at taxed at a higher rate than higher income earners have been identified as primary to the Namibia’s growing inequality.
Essentially an individual tax comparison between Namibia and neighbouring South Africa would reflect that Individuals earning taxable income of N$200 000 per year are taxed 32 percent more than those in South Africa while those with an annual income of above N$2,5 million are taxed 21 percent less.
Gerda Brand who is the Tax Director at Deloitte Namibia in relation to this tax brackets implored Government to do something about as this expanded the inequality gap: “We need to do something about this in the light of inequality,” she emphasised.
According to the 2017/18 budget, the maximum marginal rate for the year of assessment ending 28 February 2018 remains unchanged at 37 percent and applies to taxable income in excess of N$1 500 000. The minimum tax threshold remains unchanged at N$50 000.
Minister of Finance, Calle Schlettwein admitted that this is indeed a problem that Government is keen to look into and rectify in the best possible time.
“I have always looked at these comparisons and I agree that we have to look at that and see if we can lessen the tax burdens of those in lower income groups. It is something that we would want to take up, maybe not this year but maybe after two years after we have assessed other tax reforms that can fill the void,” he said.
Government recently proposed a new tax policy and tax administration reform as well as completion of some of the major ongoing reforms with the objective of deepening and broadening the existing tax base, curbing tax base erosion, profit shifting and tax planning opportunities as well as improving overall efficiency in the tax administration function.
Tax proposals for curbing base-eroding tax exemptions and deductions on the Income Tax and VAT will be proposed through a stakeholder consultation process. Examination of the current provisions of the tax code indicates that effective tax rate categories of company tax reduce significantly when exemptions and deductions are considered.
Similarly, a tax proposal for a Simplified Presumptive Tax on small units will be developed and tabled.
A further increase of the fuel levy administered under the Customs and Excise Act is proposed at rates to be determined during the determination of the taxation proposal.
“The provisions of tax on capital gains will be expanded to provide for wealth-based taxation on certain categories of capital assets,” Schlettwein stated.
Tax proposals on wealth tax will be developed and further to embody the principles of Solidarity Wealth Tax.
The transitional modalities for the establishment of a Semi-Autonomous Revenue Agency will commence with the expected tabling of the enabling legislation during this session of Parliament. To provide for the seamless transition process, the expected Day One of the Agency will be April 1 2018,
In line with the regulatory determination by the Bank of Namibia to phase out cheque payments, the Receiver of Revenue will cease to accept cheque payments by June 30.
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