An increase in income tax has aided the Botswana Unified Revenue Services (BURS) to grow its revenue collection despite a significant drop in other collections including the Value Added Tax (VAT).
Available figures show that the upward trend in income tax has thus helped the agency to meet its annual collections target with an overall excess of 1.9 percent recorded.
According to the BURS 2014 annual report, Income Tax in Botswana increased considerably by 35.1 percent from P10.2 billion in 2013 to P13.8 billion by the end of 2014.
On the other hand, all other collections are said to have declined considerably with VAT declining by 7.3 percent from P5.4 billion to P5.0 while customs receipts declined by 7.4 percent from P14.2 billion to P13.1 billion in the year under review.
Meanwhile BURS says during the year under review it collected P638.5 million on behalf of government departments and agencies as levies.
“Most of the collections are from the Training Levy and Alcohol Levy which contributed 45.5 percent and 44.4 percent followed by Transport permits, Road Safety and Foreign Registered Vehicles Levy with 15.9 percent,” the BURS annual report reads in part.
At regional level, Botswana’s share from the Southern African Customs Union (SACU) revenue pool stood at R19 billion (P13.2billion) which represents an increase of P1 billion from the 2012/13 period. Figures availed by BURS show that Botswana’s share from the pool still remains the second highest for the year under review as it constitutes 21.5 percent of the total shares.
The government of Botswana recently admitted that the debate on the SACU revenue sharing formula which has been on the agenda for several years has been on stand still, atleast for the past one and half years.
Trade Ministry Permanent Secretary Peggy Serame told the Parliamentary Public Accounts Committee in June 2015 that the world’s oldest customs union has been having issues, some of which are “cross border”.
Serame’s presentation to PAC follows a recent tip off to Sunday Standard that SACU’s previous scheduled meetings did not materialise as some officials of certain countries snubbed the meetings citing various unconvincing meetings.
The sharing formula is a contentious issue that has not been resolved and there are worries that should the current format be changed, Botswana could lose large sums of money it gets from the world’s largest customs union.
A paper by Prof Roman Grynberg, formerly with the Botswana Institute of Development Policy Analysis (BIDPA) on SACU Revenue Sharing Formula: The History of An Equation, points out that SACU revenue has become important to the country’s budgeting.
“However, the risk for even Botswana, the country with the highest GDP/capita in SACU, is that SACU revenue, which is used to cover both the recurrent as well development budget of the country, has now become such a significant portion of total government revenue that the macroeconomic adjustment to any change in the formula or movement to another trade regime would be extremely difficult and fiscally destabilising,” said the former BIDPA scholar.