A Sub-Saharan Tax Forum technical adviser Lupambo Mwamba says Botswana should do away with incentives such as tax holidays which are offered to large foreign corporates who desire to set up shop in Botswana.
Addressing delegates recently at a seminar hosted by Sub-Saharan Tax Forum, Mwamba said although the country wants foreign direct investments (FDI) that these entities provide, “Botswana will lose potential income as a result of this incentive.”
He went further to say Botswana government should liase with other government in Sub Sahara “to create a sovereign wealth fund that can gather in taxes through different sources in order to be able to counter certain problems, while promoting trade and growth.”
Touching on the function of taxation in development, Mwamba made clear that tax and development are interchangeable. “The purpose of tax in state building is to boost the administrative, fiscal and institutional capacity of governments to interact constructively with their societies,” he said, adding that “Taxation is essential for any state to function, and the most dependable way to get it to do so is by drafting a comprehensive and effectual tax administration.”
Amongst other things, he said policy makers must be aware that tax collection should take precedent to the exercise of state power, making the need to tackle governance issues in tax collection of greater value. Mwamba said factors undermining state building include tax evasion, which he says has already affected Botswana immensely since billions have been lost already which could have benefited the economy “through the delivery of public services”.
Says Mwamba, “There is an indelible link between the ways in which African governments are financed, and the ways in which they govern. Governments which are more liable and accountable to the citizens are usually the ones which are very reliant on them for the much needed finance.”
He also encouraged citizens to be conscious of the fact that taxes are critical to fund government projects such as health and infrastructure, whilst concrete tax policies create developmental prospects.