Francistown legislator Ignatius Moswaane has once again made an attempt to table a motion for the Value Added Tax (VAT) to be increased from the current 12 percent to 14 percent. Moswaane says the increase is necessary as it will enable government to cater for increases in public servants salaries and other government expenses.
The motion was first brought to parliament during the last session that sat in July. However the session ended without the motion being debated. On Friday, the motion was re-listed on the order paper but could not be discussed as the minister responsible for Finance Kenneth Matambo did not attend parliament. Moswaane’s motion is however likely not to get any support from other legislatures. Members of Parliament across the political divide that spoke to The Telegraph on the sidelines of the parliament session this past week poured cold water on the proposed increase of Value Added Tax (VAT).
The MPs, most of whom preferred to remain anonymous until the motion is debated argued that Moswaane’s proposed intervention is misplaced and will negatively impact ordinary Batswana who have to contend with reduced purchasing powers and low income. The increase of VAT, they argued, would definitely increase prices in the market places, condemning struggling consumers to hopelessness and misery. The last VAT adjustment was over four years back, in line with the SACU trade agreement that proposes that member states tax regime should be at par. That means Botswana moved closely towards what most countries within the club are at. South Africa is presently at 14 percent.
Still with issues related to VAT, during the financial year 2014/15, Matambo through Parliament made amendments to amend the Income Tax Act and the Value Added Tax (VAT) Act. Specifically, the VAT Act was amended to exempt all farming equipment and all basic food staff which are currently zero rated. Matambo said the move to amend the VAT Act is meant to encourage intake of balanced meals for families. The minister said the list of basic food items will be increased to include, among others, vegetables, rice and milk. In addition to the proposed change, Matambo said that the VAT registration threshold will be increased from P500 000 to P1 000 000 in order to relieve small tax payers on the burden of regularly filing VAT returns.