Muted cheers as BURS exceeds tax targets
Mbongeni Mguni | Monday April 18, 2022 06:00
Yesterday, officials at the tax agency said the improved collections were helped by higher contributions from income taxes and Value Added Tax (VAT).
VAT was increased to 14% in April 2021, while the withholding tax on dividends was increased to 10% from July of the same year. Authorities however, raised the income tax threshold for resident taxpayers to P48,000 per annum, from P36,000.
BURS officials said SACU revenues, which represent a key income stream, declined in the year to March 2022.
For the tax agency, 2021 marks the first year of uninterrupted economic activity since the onset of COVID-19 in 2020, enabling technocrats to gauge the full impact of the wide-ranging tax increases effected in April 2021.
BURS commissioner general, Jeanette Makgolo said the performance was a “bold” step in the right direction for the priorities she had set herself upon assuming office in August 2021.
“You will agree with me that, during these period where macroeconomic conditions are not favourable to realise optimal revenue collection, this collection is not a windfall, but the results of deliberate efforts and hard work of visionary men and women of BURS, and our key stakeholders,” Makgolo told journalists at a briefing yesterday.
Finance and Economic Development minister, Peggy Serame said while it was noteworthy that the targets had been met, there was room for improvement in terms of efficiencies.
“When they say they have exceeded the targets, I don’t get excited,” she said.
“I tell them that we are going to increase the targets not because we will increase taxes, but because we can enhance collections, be more efficient and close gaps.
The BURS’ collections were helped by the tax amnesty offered to debtors. The scheme kicked off on July 1, 2021 and officials revealed yesterday that P394 million had thus far been collected. Another P52.2 million has been committed in payment plans by tax debtors ahead of the scheme’s expiry on June 30.
For ordinary consumers, news of the BURS exceeding its targets is a reminder of the weight of tax and levy increases introduced last year, under government’s “domestic resource mobilisation” drive to support the budget.
Administered prices, meaning those controlled by government, which went up from last April include VAT, fuel levy by P1.00, introduction of a new sugar tax, Botswana Housing Corporation (BHC) rentals, electricity and water tariffs, taxi and combi fares and various local government service fees.
On top of these, fuel pump prices were raised five times in 2021, including the “shock” increase of as much as P1.75 for certain fuels effected towards the end of the year.
This year, fuel prices have already risen by an average P1.33, a figure that excludes the P1.74 per litre increase in illuminating paraffin.
A component of the electricity tariff was also increased in February, while the BHC is expected to effect the second of its phased rental increases.
Serame said government was not in the habit of arbitrarily increasing taxes and was more focussed on enhancing collections.
“I know the pain and I know where we have been. “I believe we can get more taxes through efficiencies and not through increasing the tax rates, at least in the short term. “It’s important that we pay taxes because that where government makes its money. “It is also important that our economy grows to a broader base because that’s where the taxes will come from,” she said.
The BURS has been set a target of collecting P46.4 billion in the current financial year, which ends on March 31, 2023.