Tuesday, January 26, 2021

Gov’t levies: Business Botswana recommends scrap off, revision

Business Botswana (formerly BOCCIM) has come out to say that the plurality of government levies raises the costs of doing business and therefore undermines competitiveness of firms operating in the country.

The private sector mouth piece noted its position on the matter in a recently published report complied on its behalf by consulting firm, Sweet Fountain (Pty) Ltd. The consultants were engaged to draft a position paper on impact of commercial levies on businesses in Botswana.

According to the draft paper, passed to Sunday Standard, to date some levies do not go through the Consolidated Fund and therefore not subjected to the oversight of the Ministry of Finance and Development Planning.

The Business Botswana consultants therefore recommended a review and analytical work by government to improve efficiency in terms of tax collection and governance with regard to oversight. 

The report give feedback on levies such as the wheat flour levy, alcohol levy and road safety levy and explained how their use, management and the accountability accorded to them affect businesses.

Making a presentation on their findings to Business Botswana on Friday, Sweet Fountain consultants noted that there exist circumstances where Government is employing various forms of raising revenue with a view to augmenting financing tributaries, or to either attempt to control adverse social manifestations, or help the growth of local industry through economic protection.

“Noble as the above efforts may be, there is a concern that: in the process, the Government has instituted too many levies that have had or are having the unintended consequence of undermining and compromising the efficiency of tax-collection, and certain key aspects of good governance”.

The BOTA training levy was among the discussed levies, to which the report argues that “the private sector is not fully involved in the administration and disbursement of the fund. It is not an easy task for the private sector to access the training levy. Evidence to this effect, or a lack of absorption, is available to Government in the form of balances sitting in the relevant accounts.” The report state the fund’s design is not equitable as measured by the reimbursement obtained by the private sector and concludes therefore that it has not achieved its intended purpose.

On Friday, Sunday Standard requested an expert opinion from Grant Thornton Partner Rajesh Narasimhan who explained various challenges associated with the BOTA training levy. This includes different companies’ in house trainings which are not recognised by the regulator.

“Accreditation of trainer is also another challenge faced by companies, since not all employees, with enough experience to train their employees, are able to get themselves accredited as trainers with the current administrative procedures.” Narasimhan said Friday.

He added that companies are not motivated to send their employees for training as they feel that it’s an additional expense due to various administrative procedures involved in claiming funds. Narasimhan suggested that the BOTA course accreditation should be simplified as well as the trainer accreditation which includes considering the experience of the trainer along with the qualification. He adds that the levy should be charged differently across industries or based on the number of employees.

“In summary, for the levy to be successful, it should enable the payer to fulfil the purpose of making the levy payment. If a company paying training levy is not encouraged to send its employees for training, it would increase the cost of doing business rather than increasing productivity from a trained employee,” he said. He recommended clear communication with tax payers by the Botswana Qualification Authority (BQA) on how well employers could make use of the benefits offered by the government through it.

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