Finance Minister, Calle Schlettwein, said Thursday that estimates by Treasury officials put the contributions at between N$500 and N$600 million, but added that the money has not been budgeted for.
“We have not put that in the budget because the budget must take care of the needs of the state. The request as put forward by the Office of the Prime Minister is a request for those that earn an income to assist those that don’t have an income,” Schlettwein said.
Responding to the criticism that the proposal has received from Namibians after a letter inviting National Union of Namibian Workers to a meeting with the Prime Minister this Friday leaked online earlier this week, the minister said it is sad that Namibia as a society has lost its compassion for humanity and the recognition that we live in a world that is unequal.
Schlettwein further said that all policy options including raising taxes will be on the table if the proposed 2 percent “levy” does not yield the desired results.
“Of course, we would have all policy options on the table. If there is a need for the state to raise taxes to meet the needs of the state, of course we would do that. We will use whatever policy is available to do that.”
He, however, emphasized that increasing taxes in an economy that has suffered from negative growth over the last two financial years will result in capital flight and other negative consequences for the local economy.
“Increasing taxes will accelerate capital flight and therefore I don’t think we need to do that,” the minister said.
Secretary General of the National Union of Namibian Workers, Job Muniaro, told The Namibian on Wednesday that he does not support the proposal as Namibians are already reeling under extreme drought conditions which have made it difficult for them to feed their families.
The unionist noted that people’s salaries are a private matter, and he, therefore, has no right to decide for them.
Muniaro stressed that the union was left out of planning sessions for drought mitigation, but is now expected to step in and collect money from its members.
“I need to have an understanding before I can comment further. I don’t even know how they came to 2%. I am definitely against this proposal. But I will go and listen, and then we can decide,” Muniaro said.
First Capital Economist, Milner Siboleka, told the Windhoek Observer that the tax on individuals proposed by government in the form of a once off drought levy is as a temporal fix to the drought challenges that the country is facing and bound to face in future.
He said the proposed funding model raises sustainability concerns to dealing with disasters that frequently occur.
Siboleka added that though the levy may not seem excessive, the degree of its effect on levied individuals could vary depending on individuals’ financial capacity to accommodate the cost given that it comes in the middle of the year when most individuals’ financial budgets have already been put in place.
“Given the reality of changing climate and its impact on the economy, all stakeholders need to take proactive steps to deal with the outcomes of changing weather patterns. Agricultural production will need to adapt to new methods & approaches and embrace technology.
“Droughts have become frequent in Namibia in recent years with three of the past seven years declared as drought affected. As a result, this calls for stakeholders to plan and take steps ahead of time to prevent known impacts than assuming that every year will be a good one, a situation that could eventually land us in an unpleasant surprise.”
He said panning ahead will be more efficient and effective than measures taken in crisis mode.