“We can collect more taxes by being efficient. I am not for an increase of taxes, atleast in the short term”, declared Finance and Economic Development Minister Peggy Serame this past week.
Serame was addressing journalists in the capital Gaborone at a press conference hosted by the country’s tax collecting agency – Botswana Unified Revenue Services (BURS) on Wednesday.
To help the BURS efficiently collect tax, Serame said government will undertake key activities such as a review of tax legislation, leveraging on ICT as well as increased tax audits and inspection.
“As much as it is a responsibility of those that should pay taxes to come forward to do the needful, the need to have an efficient and effective tax collection system cannot be over-emphasised”, said Serame.
It emerged during the press conference that BURS has since conducted a tax gap study which amongst other things found out that atleast 40 – 60 percent of tax payers across tax spectrum are not forth coming. BURS says while it still studying some of the key findings and mapping a way forward, it is given that the tax gap translate to 4 – 5 percent of the country’s Gross Domestic Product (GDP).
“This is the money that could be accruing as tax”, said one BURS executive during the question and answer session when Sunday Standard seek to understand the extend of tax leakages.
In Economics world the Tax to GDP ratio is a tool used to measure a country’s tax revenue, relative to the size of its economy (measured by its Gross Domestic Product, or GDP). In Botswana, Serame recently told Parliament that the computation of the tax to GDP ratio includes the customs receipts because they comprise of Customs and excise duties which are regarded as part of tax revenue.
On Wednesday, Serame told journalists that there has been significant investment in ICT systems to enhance revenue mobilisation and service delivery by BURS.
“Two major ICT systems were procured in the last 3 years; namely, Customs Management System (CMS) and Lekgetho Live. CMS has reached its maturity as evidenced by its optimal usage by taxpayers and traders. Lekgetho Live, on the other hand, continues to experience challenges which BURS continues to address”, Serame said.
While plans have been in put place to ensure efficient collection, it has also emerged that BURS’s much anticipated electronic billing project has fainted. BURS Commissioner General Janette Makgolo admitted that the tax collecting agency had not done much ground work on the project.
“We had already floated a tender which unfortunately has not been successful because this is a complex issue. We are yet to find out how best we can approach it”, Makgolo said.
The electronic billing machine project stall comes at a time when hundreds of companies, more especially those owned by Chinese nationals are reported to be ‘creative’ when it comes to payment of tax including Value Added Tax (VAT).
Without a direct reference to anyone, Serame said at the press conference that attention must be paid to ensuring that those who should pay taxes do so. She said part of the strategy to efficiently collect tax entails enhancing the capacity, skills and capabilities of auditors at BURS in a bid to ensure that there is no tax revenue that eludes the Government. The exercise includes training tax Auditors in specialised areas such as international financial reporting standards, auditing the telecommunications, mining, retail and financial sectors, as well as transfer pricing.
“To that effect, the Auditors have commenced audits in these specialised sectors and BURS continues to explore the possibility of auditing other areas such as the tourism sector”, Serame told journalists.