Sunday, December 3, 2023

BERA, the latest SOE to impose another tax burden on ordinary people

A high rate of economic growth is the sine qua non for Botswana to generate the much needed jobs and become a prosperous – also known as high-income- economy. However, the same high and uninterrupted economic growth rate is contingent on a strong and stable macroeconomic environment, including low inflation and a non-punitive interest rate regime.   

Low inflation in particular is vital because it protects the value of savings.  A high savings rate also allows savers to invest in meaningful economic activities in the private sector to generate wealth.  It is important therefore for policymakers not to do anything that hurts savings and leaves people with less money in their pockets. After all, such an environment invariably marks the beginning of the march towards economic misery. 

One of our biggest economic policy weaknesses so far is to have allowed state-owned enterprises to proliferate and this now presents a fiscal risk. Owing to that proliferation which by the way is not based on any sound commercial reasons, we are at a point where we bail out many state-owned enterprises frequently and by so doing, put pressure on public finances.

As if the bailouts are not enough, the powers-that-be are concurrently saddling the ordinary man on the street with even more levies and taxes to maintain state-owned enterprises (SOE). BERA is the latest example of a SOE which imposes a burden on ordinary people.  At the end of last month, BERA put out a press statement in which they slapped the public with a slew of taxes on working people.  BERA is, if you like, putting an even heavier yoke of the state on ordinary people and one would be excused for thinking that they are prepared to tax anything that moves. Otherwise, how does BERA justify a 1 thebe per kilowatt hour charge for electricity? 

It is not clear whether the 1thebe is going to be collected when BPC generates the electricity or when we actually consume it in our homes. So it may well be that BERA charges BPC 1 thebe for the sin of producing electricity when the same BPC is,  as things stand,  not running a profitable business. Moreover, consumers already pay a government levy for consuming electricity. It is there on your voucher. So it is not clear therefore how piling costs on BPC makes them profitable. 

BERA has also slapped us with a 4 thebe tax on every litre of petrol or diesel we buy at the pump station. The recent fuel price hike and indeed future ones will still apply.   Ordinary people who rely on gas for cooking have not been spared either. They are going to fork out 4.31 thebe per kilogram and will pay a P 35 tax to BERA for a 90 kg container.

It is time for the government to rein in its bloated and unsustainable collection of state-owned enterprises to allow us to keep more of our money in our pockets. These SOEs cannot be allowed to continue to live off the sweat of working people.

Reducing SOEs  would produce numerous benefits. It would allow us to spend our money to create more opportunities in the private sector instead of sending it over to BERA and the myriad of other SOEs.  We would also see a scaling down of the bloated public sector and reduce the budget deficit in the process. If we keep kicking the can down the road and do not reduce   SOEs and indeed the public sector in general, we should not expect to see an improvement in performance and productivity. The SOEs cannot be expected to reform themselves.

A reduced   SOE means fewer levies or taxes and that would go a long way to enhance our individual liberty. There is never great individual liberty with big government.  Less spending on SOEs would also help us immensely in keeping inflation low and stable. We would not have the current situation where BERA triggers a spike in the price of cooking gas and fuel.


Read this week's paper