Government has struggled with declining Southern African Customs Union (Sacu) revenues due to a reduction in Sacu receipts by N.dollars 2.2 billion (11,3 per cent) from last year.
Minister of Finance Calle Schlettwein said this during a consultative meeting with the private sector on mapping out strategies on how to improve the Namibian economy here on Thursday.
He said the situation called for revenue raising measures, both on tax policy and administration to partially raise replacement revenue without which frontline services would be severely affected.
The government has not initiated to raise tax rates as the main policy tool at the beginning of the fiscal consolidation programme. In the context of declining SACU revenue and rationalised expenditure, the (tax) contribution of everybody for us to pull through is necessary, Schlettwein said.
With tightness in revenue streams arising from SACU revenue declines, it is expected that every taxpayer must contribute to the provision of frontline public services then for government to cut the supply of basic services, especially health and education sectors where pressures are already being felt, he stated.
The principle of equity sought to tax trusts at the same rate as non-mining company tax for equity purposes.
It was further proposed that the whole tax system should be progressive to avoid integration across company tax, trusts and individuals.
Schlettwein noted that one of the new generation tax administration measures is the protection of revenue base erosion, whereby proposals to eliminate unnecessary exemptions and limit the duration of loss carry forwards are to achieve these objectives.
Taxing income earned from foreign sources will expand the tax base through deepening the current hybrid system, thus Namibian residents will have to declare such income in their annual tax returns, he added.
This measure will not only generate additional revenue but also enhance neutrality in the tax system by discouraging distortionary tax effect on investment decision, Schlettwein said.
Charitable organisations and churches too, engaging in other business activities, would be required to pay tax, he added.
- Title: Tax reform for increased SACU receipts
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- Date: 4:43 PM