BURS trims tax collection forecast by P7bn
Pauline Dikuelo | Friday October 30, 2020 14:52
Ministry of Finance and Economic Development estimates in February indicated that the BURS was expected to rake in at least P44.4 billion across the various tax lines it collects on behalf of government.
However, since then, the coronavirus (COVID-19) has played havoc with the taxman’s projections. The collapse in business activity has meant lower corporate and income taxes, while strained consumers and disposable incomes have affected the levels of Value Added Tax (VAT) accruing to the state.
On Tuesday, BURS acting Commissioner General, Segolo Lekau told BusinessWeek the agency had had to revise its targets due to the COVID-19 pandemic.
“We had to revise our tax collection target due to the pandemic as the economy was affected as well,” he said.
In its February estimates, the finance ministry had expected the revenue authority to collect P15.4 billion in customs and excise revenue up from the forecast of P13.8 billion for the 2019-2020 financial year, as well as P8.6 billion in VAT up from P7.9 billion.
The BURS was expected to collect P503 million in vehicle taxes from P421 million forecast for the 2019-2020 financial year, while mineral taxes were expected to reach P5.6 billion from P5.2 billion.
Signals of significantly lower tax revenues emerged earlier this year when Finance Minister, Thapelo Matsheka announced that mineral revenues would drop from a forecast P20 billion to about P10.2 billion.
The projected deficit for 2020-2021 was increased to P13 billion from an initial estimate of P5.2 billion reflecting both lower revenues and higher spending associated with the interventions to soften COVID-19’s impact on the economy.
Government is also proposing to increase VAT to 14% in the next two years, while also introducing new taxes such as sugar and carbon, as measures to shore up revenues.
Meanwhile, Matsheka also enacted a COVID-19 corporate tax relief law on May 4, 2020, cited as Income Tax (COVID-19) (Deferment of Self Assessment Tax) Order 2020. According to the law, the deferment of the corporate tax is to “provide temporary relief from payment of tax to taxpayers adversely affected by the COVID-19 pandemic”.
The virus has also impacted trade as it has affected customs border operations.
Recently, the African Tax Administration Forum (ATAF) estimated that its member states could have lost over P5 billion in tax collections in the space of three months due to COVID-19, which is ravaging the economies of the Southern African Development Community (SADC) region including Botswana.