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There is pressure to raise corporate tax- Ndaba

Ndaba. PIC PHATSIMO KAPENG
Ndaba. PIC PHATSIMO KAPENG

Vice President-cum-Minister of Finance, Ndaba Gaolathe, has relayed economic pressures may force the ministry’s hand to up corporate taxes in an effort to increase government revenue.

He made the warning when responding to a suggestion from Business Botswana officials to lower corporate taxes so as to stimulate activity in the business environment. However, in his response, the minister said government was rather mulling over pressures to raise corporate taxes in order to bump up revenues for the country. “I doubt that under the current fiscal circumstances it will be good economics to lower corporate taxes under the current circumstances,” Gaolathe said. “Rather there is pressure to increase corporate tax,” he added. Botswana has fiscally been struggling to keep up with the increasing cost of running government coupled with falling revenues, which makes it difficult to finance both the developmental and recurrent budgets.

The Ministry of Finance intends to implement austerity measures in the medium-term, including reducing the civil service wage bill and cutting grants and subventions as a way of slowing down government spending and boost savings. The 2024-25 budget is expected to incur a deficit of up to P18.6 billion, up from the original forecast of P8.7 billion, after mineral revenues, particularly diamond sales plummeted, while spending remained robust. The Government Investment Account (GIA), which is managed by the Bank of Botswana and represents government savings, has fallen to record lows as the Finance ministry has drawn down deeper to finance the widening budget deficit.

Government has also borrowed more on the domestic capital market to fund the deficit, in the process incurring higher costs as lenders have raised the levels of returns they seek under the debt programme. During the Budget Pitso for local authorities, officials from various Local authorities suggested revenue pathways such as road tolling and a crackdown on those businesses and individuals who are evading taxes. “Government needs to fix the law that collects tax because there are many foreigners with shops who are not swiping or giving out receipts and instead want e-wallets and Orange Money in order to avoid tax. “That’s where the money is,” said Atamelang Thaga, chairperson of the Serowe District Council. Councils’ officials also pleaded with government not to cut grants, noting that a majority of Batswana were struggling financially, while the development needs, particularly in rural areas, still required huge amounts of capital. A budget strategy paper for the year 2025-2026 revealed that government was planning to implement ways to curb tax leakages and become efficient in raking tax funds that are being siphoned out of the country through digital platforms.

“To bolster its revenue maximisation efforts, government is implementing various policy and administrative measures aimed at diversifying and expanding the revenue base while improving operational efficiencies. One of the key initiatives is the introduction of th Value Added Tax (VAT) on remote services,” the paper noted. “To further curb leakages and maximise revenue, the Botswana Unified Revenue Service (BURS) is rolling out Electronic Invoicing (E-Billing) for efficient VAT collection, with the pilot phase of a three-year project scheduled for completion in March 2025,” the paper added. Corporate taxes in Botswana range between 15% and 25% according to the industry.

Editor's Comment
UDC's 100 Days: Please deliver your promises!

We duly congratulate them to have ousted the long ruling Botswana Democratic Party (BDP) from power. Prior to taking power from the BDP, the coalition had made several election promises that are credited for influencing change and swaying the people to vote in its favour.The party had made an undertaking, which its leader and President Duma Boko consistently bellowed in his campaign trail. These undertakings were promises that Batswana would be...

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