Wednesday, June 29, 2022

Stealth taxes are making matters worse for struggling households

Botswana government, especially the President and also the Minister of Finance cannot forever ignore clear signs that the country is in the jaws of an ever deteriorating cost of living crisis. The pressure is on. And the sooner they act on it, the better for everyone. We are sorry to say that it is our view that not enough is being done to come to the assistance of poorer households who are at the receiving end of this cost of living crisis.

In our view a supplementary budget aimed at addressing the matter is not out of question, public finances allowing. Given the scale of the crisis government might have to consider an emergency budget to act as a stop gap to supplement the one recently passed by parliament because the passed budget will certainly not go far enough to address the fast unfolding crisis. There is need for a clear plan on how Botswana government intends to confront the already out of control cost of living crisis. The high cost of living is not only affecting the unemployed, it also decimates the employed at an ever shocking scale.

Pensioners, unemployed and the poor are no doubt the worst affected by the rising cost of living. Yet we have to point out that even working families are failing to cope. We know that the way our society is structured, unemployed people often rely on their relatives who are employed for sustenance. That is not possible under the circumstances because even the employed are no longer able to cope with soaring bills. Given the high unemployment rate, it follows too, that  many people have been left exposed, not least because the cost of living undercuts the extended family structure that was in any case already weakening in the country long before the current crisis. Cost of living has become a big crisis.

The truth is that it is not just Botswana experiencing it. However other countries have their governments trying to do something about it by coming up with mechanisms and interventions to cushion their citizens, especially the poor and most vulnerable. You know the economy is going through a rough patch when food prices reach the levels that they have in Botswana. It is no longer a laughing matter. The situation is made worse by several increases effected on such things like electricity and water. Added to the mix is fuel, with increases that have become totally unbearable. We have to point out that Botswana Government has not helped the situation by taking a decision to increase levies on a raft of services they provide to the public. These increases have been significant.

In actual fact they amount to stealth taxes. The intention on the part of government was to raise much needed revenue without annoying people by coming up with new and formal taxes. Sadly under the current conditions the effects are the same. These levies should be reviewed urgently as should be VAT and other taxes which as we know  were recently increased shortly before it became apparent that inflation and geopolitical factors will connive to sow havoc in people’s lives and livelihoods.

The trouble, which Botswana Government is reluctant to publicly share is the extent to which it is constrained to act or help. Botswana government should be more honest and more upfront with the public on the state of public finances and also on the performance of the economy. The solution to the current problems is economic growth, which we know will not happen overnight because of different bottlenecks, many of which Botswana government has little control over. This calls for more transparency, including pointing out that the days when Government acted like it’s Father Christmas are over. Botswana Government should make it clear that inflation is out of control and that it is not only Botswana experiencing it as the effect is global. Food prices are also going up.

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