The Leader of Opposition in Parliament, Dithapelo Keorapetse says there has been a monumental failure to collect revenue and diversify sources.
He was responding to Finance Minister Peggy Serame’s budget speech.
“The economic high command responsible for inter alia revenue collection is weak against high tax payers. We have asked this government to make sure that a significant portion of pensions and insurance funds’ investments are invested locally to finance infrastructure upgrades. There has been a monumental failure to collect revenue and diversify sources. The economic high command responsible for inter alia revenue collection is weak against high tax payers,” said Keorapetse.
Keorapetse quoted the Revenue Statistics in Africa 2022 which he said state that the tax-to-GDP ratio in Botswana decreased by 1.3 percentage points from 13.7% in 2019 to 12.4% in 2020. The highest tax-to-GDP ratio in Botswana was 17.4% in 2008, with the lowest being 12.4% in 2020.
“Why is Botswana collecting taxes and other revenue like a weak state? What obtains is disheartening. Billions of Pula are lost in uncollected revenue because according to a Performance Audit Report by Auditor General of Botswana on Collection of Royalties and Dividends by the Department of Mines No 1 of 2021, Mining Companies did not pay royalties as required and that government is owed quite a significant amount of money in royalties.”
The Auditor General, Keoorapetse said, further noted too much leniency on culprits. The audit noted limited compliance in the submission of monthly mineral production returns and not declaring true production as well as under-declaration of production contrary to Section 598 of Mines, Quarries, Works and Machinery Act 2002.
“In clear violation of Section 66(4) of the Act, payment vouchers reviewed were not accompanied by the necessary supporting documentation to validate the accuracy of amounts paid, with no reference to quantity, quality, weight and color or shape or other details of the commodity produced, in the case of diamonds. Wait…Diamonds? The mainstay of the economy?” said Leader of Opposition.
He claimed that mining agreements are not even available to the auditor general as they’re considered to be confidential, especially for Debswana or companies with partnership with Botswana Government.
“Who then guards the guardians? Who scrutinizes these agreements? What is the role of parliemnt? This secrecy also presents a huge challenge of the inability to audit the payments of dividends as these are contained in these top secret contracts. It is also against internationally acclaimed principles espoused by Extractive Industries Transparency Initiative to publicly disclose mining contracts, agreements and licenses” said Keorapetse.
The UDC recommends stiffer penalties and closing of loopholes for perpetrators of tax evasion and avoidance, non-payment or false payment of royalties, under declaration of production and strengthening of monitoring of mining operations.
“We recommend a clear plan with targets for maximum collection of mining revenue. All businesses of a size that BURS could determine, must have payment terminals in the form of Electronic Data Capture Machine/Card swipe machine linked to BURS to monitor transactions. Restrictions should be imposed on cash transactions to set a ceiling of how much one can pay with cash,” said Keorapetse.