Members of Parliament across the political divide this week poured cold water over the proposed increase of the Value Added Tax (VAT), arguing the intervention was misplaced and against the ordinary Batswana operating the under the unpredictable cloud of the global crunch.
Contributing to the budget speech presented to parliament Monday by Minister of Finance and Development Planning, Kenneth Matambo, members of the house expressed concern over the envisaged VAT hike┬á saying it was indiscriminate and┬áadding that it┬á will ┬áimpact negatively on the ordinary Batswana ÔÇô especially the unemployed and the under employed.
They said the under employed people,┬ásuch as those on government┬ápublic works programmesÔÇöIpelegeng ÔÇô earn as much as P 370 per month are bound to be affected.
Government has introduced the phony public works programme aimed at getting the unemployed off-the-streets and now as many as 66,000 people have been enlisted┬áunder the programme which government claims has solved the problem of unemployment.
To give itself credit, government claims that the poverty datum lineÔÇömoney that one needs to survive in this country — is set at P 138.00 per month.
The government’s figure of P 138.00 per month, which is well below the United Nations’ estimate, is expected to cover accommodation, access to health,┬áfood┬áand other general up-keeping that ensures that one has a decent life. ┬á
The BDP MP for Kweneng South, Mmoloki Raletobana, said: “I am totally in disagreement with this envisaged increment of VAT, particularly that it is indiscriminate, incorporating everyone regardless of their economic status. Worse still, the civil servants for the past two years have not seen their salaries increased owing to the current global crunch. The so-called global crisis has negatively impacted on their livelihood and by increasing VAT, we would be completely making life miserable for these hard working employees pivotal on government development projects.”
Instead of increasing VAT, Raletobana┬ácalled for the withdrawal of certain government development projects that may be deemed to be not that critical.
Lobatse MP Nehemiah Modubule added: ┬á“The increase of VAT in this era of gloom does not qualify and so is the freeze of civil servants salaries, whose monthly remunerations were increased two years ago.”
“It defies logic for the government to increase VAT on grounds it is operating on thin ground to raise funds while by the same vein the same government sings another song, splashing money to buy a luxurious jet for the president and pump money into the controversial Directorate of Intelligence Services,” he said.
Presenting the budget speech Monday under the theme “transforming our economy after the crisis: 2010 and beyond”, Matambo argued that owing to the decline in the Southern African Customs Union pool, arising from a significant drop in high duty imports, the customs revenue for 2010/11 will be significantly less than in recent years.
Against this backdrop the finance minister noted a number of adjustments will be required, including several fees and levies that have not kept up with the costs of providing the associated services.
The increase of VAT is in line with the SACU trade agreement that proposes that member states tax regime should be at par.
That means Botswana is closely moving towards what most countries within the club are at. South Africa is presently at 14 percent and is viewed as one sources of raising revenue for the state.
“The requirement that commercial parastals pay 25 percent of their profits to government will be strictly enforced. Finally, I proposed to increase the VAT rate from 10 to 12 percent, effective 1st April 2010 and to raise the threshold for VAT registration from P250 000 to P500 000,” he revealed.
For his part Francistown South MP Wynter Mmolotsi insisted on the scrapping of the controversial Specially Elected councilors nominations whose remunerations would be diverted to raise funds for the government.
“Money used to pay these specially elected councilors would be a good way to raise funds for the government. The increase of VAT to raise funds is not a plausible move. By proposing such an intervention our government is completely misplaced,” Mmolotsi reasoned.
While acknowledging VAT a good source of government revenues, MPs urged the government to search for other means than the increase.
The increase of VAT, they argued, would definitely increase prices in the market places rendering the struggling consumers to wallow in the state of hopelessness and misery.