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Thursday, 2 September 2010   |   Issue: Vol.27 No.31  |  Monday, 01 March 2010
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Two percent VAT increase a sucker-punch

"Madam Speaker, although achievements have been made including in areas such as education, health and infrastructure development, conditions of poverty still persist," said the Minister of Finance and Development Planning, Kenneth Matambo when reading the budget speech.


 
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He later said, "Finally, I propose to increase the Value Added Tax rate from 10 to 12 percent, effective April 1, 2010 and to raise the threshold for VAT registration from P250 000 to P500 000."

This was a hot smack across the voters' faces. As if this was not enough, an even hotter one landed. "Council has recommended that there be no public sector cost of living adjustment during the 2010/11 financial year." The three quotations above are so interesting. Look at them closely. The paradox between them is so glaring.

When I heard these statements, I went down memory lane and thought about what I witnessed the day before the general elections last year (2009). The euphoria was fast and furious. Some political fanatics were thrown into oblivion of the dangers they exposed their lives to. I saw vans, cars and trucks jam-packed with people wearing their party colours. The hooting and exuberant singing of fulsome songs about political candidates and parties created a frenzied atmosphere. I feared for their lives!

Some people were precariously perched on top of truck roofs brandishing party flags. They could helplessly fall from there when the truck moved over a pothole or when it made a turn. The cars moved at high speed with heads sticking-out of windows. In rear parts of vans, peoples' legs hung out. Their faces glowed with excitement and they seemingly smelt no danger in their behaviour. They had been promised. The majority of voters cast their ballot for Botswana Democratic Party. It won the elections.

This is what you got for your vote! Two percent increase in Value Added Tax. This would be a painful pinch to the ever-ailing voter's pocket. The people's buying power, which is time and again sapped by fluctuating inflation rates, would take an even more debilitating battering from this. There was no pay rise for public servants in the budget, but pay decrease. The two percent VAT increase is tantamount to a reduction of some percentage of Batswana's salaries.

Does the opaquely veiled political posturing during electioneering times fool the unsuspecting poor voters? At political rallies politicians tell the electorate that if they vote for them to become councillors or parliamentarians, they would represent their interests. The president does the same when politicking for candidates from his party.

Having enough money to buy things that one needs is one of the voters' interests. The VAT increase and no increment to the voter's wages was a sheer betrayal. The people who decided to increase VAT have fat bank accounts and the adjustment will have an insignificant negative impact in their financial lives. Conversely, those who voted them into power: the elderly, the young, the blind, the poor, the jobless, the physically disabled, the orphans and those who are paid peanuts, would have to live the hard way.

We have families in the country that are reeling in dire straits of poverty. They have had that deep economic hole that they have tried to fill up and it is now ages; it is still a struggle to put food on the table. When they manage to get something to eat, it is just a cheap, non-nutritritions nutritious meal. They struggle to pay school fees.

Generally, life for them is a typical walk over a quagmire. The president has had countless meetings in the rural areas. When he drives into these villages he sees those dilapidated mud houses. The crevices in those walls are a sign of poverty.

He has shaken numerous hands in those areas, they too told a story. The clapped-out clothes and the quality of some rural dwellers skins also make the message clear. There is poverty in this country.

If they do not have healthy livelihoods and life is difficult for them; why worsen their situation? Did the sense of humanity have space in the hearts of those who made the decision?

We are well aware of the global economic downturn. This hit countries. Botswana was not spared either. The country needs money. The government would say increasing VAT is a necessary evil.

The country is going to generate a lot of revenue through this. But is it right to make millions of pula through twisting the hand of the underprivileged? There were so many dissenting voices against the VAT issue and the zero increment in public service salaries. Some castigated the government for continuing with the Constituency Football League.

They feel that it is one of those initiatives that should have been put on hold during this rough patch in our economy. Does the league bear any positive fruits? The binge drinking that the president has launched a robust campaign against reins at this league's games. What happens to the money that the teams win? During the day, some of the thieves, burglars and robbers would be playing football. Of course that keeps them away from perpetrating crimes, but at night because of joblessness and poverty they would be out there doing their thing. In these difficult financial times, the league should have been shelved.

Some parliamentarians and the general public have gone for the jugular against the government asking why it went on with having specially elected councillors who are so many and are paid large sums of money.

MP Wynter Mmolotsi was quoted in the issue of the Daily News published on February 15 saying that the government must dispense with specially elected councillors because it neither makes any economic sense nor adds any value to the political system.

Quite a number of people agree with him. The government has embarked on a number of projects: building schools, dams, roads and many others. If the government could have had the constituency football league, election of special councillors, have some of the projects and some of the legislators' allowances stalled, may be it could have not found itself going for such a desperate and insensitive measure to make money.

It is likely to be a long and difficult journey for Batswana. We do not know yet when the economy is going to slide back to normalcy. It is highly unlikely that there would be a U-turn on the decision.

What would happen when that happens anyway? Would the two percent VAT rise be lifted? Would there be an increase to people's wages to mitigate the harsh cost of living? It is common knowledge that whenever a country goes through economic doldrums, the masses become the hardest hit. It then really defies belief when decisions that further throw them into financial difficulties are made.

FOREIGN EXCHANGE: Thursday, 02 Sep 2010
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