VAT increment, a double blow far Selebi-Phikwe

CALISTUS KOLANTSHO
Correspondent | Friday February 19, 2010 00:00

The Minister of Finance and Development Planning, Kenneth Matambo announced in his budget speech last week that the VAT increase which is effective from April, is one of the many measures that the government has taken to get total estimated revenues as minerals revenues is not expected to reach normal levels until the 2012-2013 financial year. There was also no salary increase for civil servants for the second year running.

Speaking to Mmegi in an interview, Business Package Consultants Director, Dzimmbire Elliah Chimbwete said VAT increase has negative and positive impact to businesses and individuals. He explained that for individuals, the cost of goods and services will go up due to the two percent that has been added. He complained that due to the misconception by some businesses, they will just increase prices because of the announcement.

He said the business environment in Selebi-Phikwe is small apart from retailers, adding that the cost of doing business will go up. He explained that most of the small businesses will have to de-register from paying VAT. He said when consumption of goods and services go down, their profits will also decline. Chimbwete appreciated the decision by the minister to increase the threshold of being VAT compliant from P200 000 to P500 000. He explained that being VAT compliant is costly because the company has to hire experts to do its  books. He mentioned that if VAT is paid late there are penalties and interest that BURS charge.

Chimbwete said the increase of the threshold means that small businesses do not have to worry about registering for VAT or hiring an accountant to do their returns. Chimbwete observed that the increment of VAT might see some companies retrenching employees as a way to meet costs but he does not see companies relocating from Selebi-Phikwe because of the increase.

Andrew Mosweu of Smart Youth Drycleaners said VAT increment is a double blow for Selebi-Phikwe. He explained that their businesses cannot increase prices because it will be killing their customers. He says they cannot even make a profit because VAT has been upped. One of the residents, Joel Ditirwa said Botswana is not ready for VAT. He complained that prices are high in supermarkets especially food in Selebi-Phikwe. He mentioned that the move to increase VAT will bring down the economy of the residents. Ditirwa said people who work in the Ipelegeng Programme have been condemned to poverty. He also mentioned that the government should have increased salaries before VAT.