‘Tax changes will bring more misery’

12 October 2018 Author   CHAMWE KAIRA

Economist Rowland Brown has warned of dire consequences to the Namibian economy if government goes ahead with its proposed tax changes announced recently by the finance minister. Economist Rowland Brown has warned of dire consequences to the Namibian economy if government goes ahead with its proposed tax changes announced recently by the finance minister. 

Speaking at consultative meeting between Finance Minister, Calle Schlettwein, and representatives of the private sector on Thursday, Brown said the tax changes will further shrink the economy, which is already in recession for the last nine quarters.
He said government should be reducing corporate tax to stimulate spending by the private sector instead of rising taxes, adding that households, the government or foreign investments are unlikely to stimulate economic growth at the moment leaving out corporates as the only hope. 
Brown also warned that resolutions taken at the just ended Second National Land Conference including that of land expropriation may scare investors from coming to Namibia.      
Other industry leaders at the meeting with Schlettwein proposed a number of ideas, which they said could help stimulate the economy currently in a comatose state. 
Businessman Leake Hangala said Namibia need to change its visa regime especially with South Africa to make it easier for South African experts to work in Namibia. 
Former NCCI CEO, Tarah Shaanika, bemoaned bureaucracy in government and municipalities, citing a case where investors want to set up a processing factory worth N$108 million, but cannot find land.     
Pupkewitz Group CEO, Dougie Truter, said the government appears to have short-term plans when it comes to development. 
He said there are a lot of companies ‘sitting on cash for as much as N$300 million’ which were looking for partnerships with the government.
Chamber of Mines of Namibia President, Zebra Kasete, called on the government to develop long-term water supply plans, saying water shortages were forcing the mining industry to scale down on production.
Schlettwein, however, defended the Draft Income Tax Amendment Bill, saying it is not the intention of the government to come up with proposals that will cause unintended consequences.
“The proposals seek to tax trusts at the same rate as non-mining tax for equity purposes. Entities, which earn the same levels of income, shall be treated similarly,” he told industry leaders.
He said the whole tax system should be progressive to avoid integration across the company tax, trusts and individuals.
“The tax burden would be equally shared more than the current state whereby individuals bear a disproportionately larger share of burden than companies and trading trusts.”
On income tax, Schlettwein said the thresholds have not been changed for some time now. He said the proposed changes have taken into account that Namibia has one of the highest unequal societies in the world. 
Schlettwein also said income earned from foreign sources will expand the tax base through deepening the current hybrid system.
“Namibian residents will have to declare such income in their annual tax returns. This measure will not only generate additional revenue, but also enhance neutrality in the tax system by discouraging distortionary tax effect on investment decision.”
The changes include that people who earn between N$1,5 million and N$2,5 million per annum will be taxed N$455,000 plus 39 percent of the amount by which the taxable amount exceeds N$1,5 million.
Those earning more than N$2,5 million per year will be taxed N$845,000 plus 40 percent of the amount by which the taxable amount exceeds N$2,5 million.
It is further proposed that those earning from N$500,000 and N$800,000 per annum be taxed an amount of N$121,000 plus 32 percent of the amount by which the taxable amount exceeds N$500,000, while people earning up to N$1,5 million will be charged N$217,000 plus 34 percent of the amount by which the taxable amount exceeds N$800,000.
Other changes in the Bill are that an annual income between N$150,000 and N$300,000 will be charged N$20,500 plus 27 percent of the amount by which the taxable amount exceeds N$150,000.
A tax of N$61,000 plus 30 percent of the amount by which the total taxable amount exceeds N$300,000 is proposed for people earning between N$300,000 and N$500,000.
Those earning annual incomes between N$100,000 and N$150,000 will be charged N$8,500 plus 24 percent of the amount by which the taxable amount exceeds N$100,000.
The Bill also proposes that those earning between N$50,000 and N$100,000 be taxed 17 percent of the amount that exceeds N$50,000 while people earning less than N$50,000 per year will not be taxed.

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