Tax Relief on Food?

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By Petronella Sibeene

WINDHOEK

Government could scrap taxes on basic consumer goods like sugar and other essential items, in addition to mealie-meal in an effort to provide relief to Namibians who since the beginning of this year have been besieged by a spate of increases on food and fuel prices.

As part of the many options under consideration to aid debt pressed citizens, the Government could exclude consumers from paying Value Added Tax (VAT) on sugar.

In an interview yesterday, Prime Minister Nahas Angula said an ad hoc committee chaired by him is awaiting a survey report from the technical committee on options that the Government should apply in order to relieve Namibians of the high food and fuel prices.

“Government is aware of the plight of the people on the cost of food and we are trying to be pro-active,” Angula said.

Food prices have almost doubled and fuel continues to go up affecting all populations regardless of their economic and social status. Just this week, the Minister of Mines and Energy Erkki Nghimtina announced yet another fuel price hike with diesel breaching the N$10 mark today at midnight.

The Premier said there is tax relief already on mahangu and mealie-meal.

Permanent Secretary in the Ministry of Finance, Calle Schdlettwein, confirmed that the tax portion on the two products is 15 percent off the total price.

The Prime Minister also said a need might arise to appoint a commission that will monitor and ensure all the retailers are implementing
tax relief measures on the chosen products.

Other relief measures for consumer added Angula, would be engaging retailers as corporate citizens to come up with prices that are affordable.

The other way would be to go full steam on the green scheme and maybe also encourage the private sector to grow winter wheat, he said.

According to the Prime Minister, the country faces a critical situation especially that the last planting season was drought prone and this year flood prone.

“Ever skyrocketing fuel prices are fuelling inflation that affects food prices so much that the country is faced with a dilemma,” Angula said.

Because of that, the Cabinet Committee on Policy and Priorities chaired by President Hifikepunye Pohamba identified the need to develop a response to the situation.

In order to examine the situation before implementing relief measures, an ad hoc committee was created as chaired by Angula.

Local economist and Chief Executive Officer of RMB Asset Management Namibia, Martin Mwinga, says rising fuel prices will no doubt automatically lead to another round of increases in food prices.

He says the purchasing power of consumers is diminishing.

With fuel going up at midnight, Mwinga warns that the poor will bear the heaviest impact because they spend 60 to 80 percent of their income on food.

He said high income-earners that spend 15 to 20 percent of their income on food will also feel the pinch, but their impact will be felt more in their travel expenses.

To worsen the situation, banks have tightened their lending standards resulting in a limited scope for consumers to borrow from the banks.

This trend Mwinga highlights, does not support economic growth and may lead to more consumers losing assets such as homes, furniture repossessions and collapse of friendships and marriages in worst case scenarios.

Mwinga also suggests that one tax measure that the Government could consider is suspension of VAT on most goods, to help reduce prices.

“This is also an opportunity for the Government to start considering an increase in tax threshold to more than N$50??????’??

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