The Namibia Chamber of Commerce and Industry (NCCI) has welcomed the introduction of an export levy on raw minerals, fish and forestry products, which came into effect last week in a bid by Government to encourage value addition of Namibian resources.
Leonard Kamwi, a policy advisor at NCCI said the business grouping fully supports the country’s industrialisation efforts including efforts to develop value chains.
“The chamber further understands that the Export Levy Act is intended as an industrial policy tool to stimulate further processing or manufacturing. To this end, the chamber is aware that export taxes have been used by governments all over the globe as a tool in their industrial policy since the 11th century,” Kamwi said.
He, however, said there is need to complement the export levy with other efforts if Namibia is to derive maximum benefits from its raw materials.
“A more appropriate policy response is to target the cause of the problem as close as possible to its source. Such responses might include regulatory reforms to remove inefficiencies in the financial system that impede diversification and investment promotion, including incentive structures to stimulate the needed manufacturing activities.”
The levy was created through Export Levy Act, No. 2 of 2016, which seeks to improve Namibia’s value share in its resource base and to encourage further processing or beneficiation of goods, among others.
Pure unsorted rough diamonds now attracts a two percent levy, sorted diamonds a 1,5 percent levy, and sorted and graded gems, one percent.
Diamonds that are cut and polished are now charged a 0,50 percent levy while products or jewellery made with diamonds will not attract any levy.
In terms of levies on zinc, crushed ore attracts a levy of two percent, zinc concentrate 1 percent, zinc sheets 0,50 percent, zinc ingots 0,25 percent, while steel products will not be levied.
Lead, copper and manganese concentrate, and gold bullion now attracts a one percent levy. Uranium oxide and acid grade fluorspar are now levied at 0,25 percent, and the same applies to precious stones other than diamonds.
Unprocessed fish exports attracts a levy of 1,50 percent while seal fur exports are now being charged a one percent levy.
Mopane roots attracts a two percent levy, devil’s claw tubers 1,50 percent while hoodia plant log export is being charged a two percent levy.
The export levy, which came into effect on 1 June, has been on the cards since 2012, but its implementation faced resistance, particularly from the Chamber of Mines of Namibia, which argued then that such a levy would discourage investment into the mining sector.
Former Chamber of Mines President Mark Dawe told The Namibian Economist in 2012 that the profitability of large mining companies was being challenged owing to the “short-sightedness of the Ministry of Finance”.
He said Treasury was trying to improve its revenue flow by taxing an industry that is already over-taxed.
“Namibia’s taxation rate for mining companies is one of the highest in the world when viewed as an overall “effective tax” or cost to company, which includes royalties on gross sales, taxes to shareholders and profits tax. The latter, at 37.5% is simply unattractive to investors. When viewed as a total effective taxation rate, government is simply taking too much,” Dawe said at the time.
When he tabled the Export Levy Bill in Parliament last year, the Minister of Finance, Calle Schlettwein, said that once the bill became law, Government could expect the country to earn N$130 million from the levy in the current financial year.