Windhoek-During the next session of Parliament, Minister of Calle Schlettwein intends to table a tax proposal for the introduction of the presumptive tax on the informal sector, while giving due consideration to the micro units, and intends to introduce measures to protect the tax base from erosion, profit shifting and illicit outflows by eliminating some categories of tax exemptions.
In addition, the Namibia Revenue Agency Bill has been passed by Parliament and is due for enactment, while the Integrated Tax System is expected to be rolled out by mid-next year.
Schlettwein revealed these pending measures on tax policy and tax administration reforms envisaged in the medium-term when he spoke at a mid-term budget debate at in Walvis Bay on Friday. The event was sponsored by PWC Namibia, Standard Bank Namibia and Namibia Media Holdings (NMH).
“As the economic recovery takes shape, it is not my intention to increase general tax rates, but we intend to bring all potential taxpayers in the tax net and achieve full compliance. This is to allow for economic agents to produce and invest, while creating incentive to work, and promoting equity and fairness of the tax system,” said Schlettwein.
He noted, however, that the conduct of fiscal policy must be accompanied by effective domestic resource mobilisation and increasing tax capacity. This, he said, flows from the recognition that no country can depend on other countries’ resources to finance its development agenda.
“We will continue to strengthen the mobilisation of domestic revenue streams through tax policy and tax administration reforms to support the implementation of the fiscal consolidation and enhance the distributional impacts of tax policy,” Schlettwein added.
The finance minister also noted that a smooth reduction of expenditure will be employed going forward by maintaining a gradual fiscal consolidation policy stance that could safeguard macroeconomic stability and long-term fiscal sustainability.
This, he said, will be implemented through a smoothly paced fiscal consolidation programme and shifting more resources from non-core to core priorities and basic public services, without compromising economic growth.
To achieve this, he cautioned that effective expenditure control measures and fiscal risk management framework will be employed, while the focus on spending on health and education sectors, as well as skills development, will be attained.
Schlettwein further noted that mobilising domestic resources for development through tax policy and tax administration reforms, increasing the domestic asset requirement for institutional investors, alongside measures to improve the investment climate, would act as a major spur to internal economic growth, which canonly be enhanced by implementing supportive policies and structural reforms to improve efficiency and broaden the economic base.
“It is well known that Namibia generates excess savings that flow out of the country, while our capital development continues to compete with limited resources. As a consequence, alternative funding mechanisms need to be established.
“Government has made efforts, such as the amendments to Regulations 15 and 28, as well as the new Regulation 29, aimed at keeping domestic savings in the country. However, there is a need for more economic assets to attract these savings. Hence, the founded need to establish the Infrastructure Fund as one of the vehicles through which such capital could be leveraged.”