Budget: Tax disappointment: economists

TWO local economists have expressed disappointment with the lack of tax relief in yesterday’s National Budget delivered by Finance Minister Saara Kuugongelwa-Amadhila.

Ernst and Young Tax Partner Cameron Kotze told The Namibian that he was ‘very disappointed’ with the budget, as it did not offer any tax relief to low-income earners. He said since the Minister confirmed that revenue collection had improved, it would have been good to increase the current tax threshold of N$36 000 a year.”I would have liked to see the threshold increased to between N$40 000 and N$45 000 to help the already burdened low-income earners,” he said.He added that since South Africa had cut its corporate tax to 28 per cent, he had expected the Minister to follow suit and drop the Namibian rate from the current 35 per cent, which he described as uncompetitive.Income tax on profit went up from N$5 billion to N$6,6 billion – which is a 28 per cent increase.Kotze’s sentiments were echoed by Emile van Zyl of Simonis Storm Securities.He said it was a letdown that there was no tax relief for individuals.”Except last year, nothing much has been done in the recent years to lessen the burden on the taxpayers and to shield them from situations like rising inflation,” he said.Both economists, however, added that the Minister might have held out on tax relief as a cautionary measure for the long term, as Sacu revenue is expected to decrease over time.Van Zyl commended the Minister for her bold stance on spending, saying this was pro-poor.He explained that currently the mining sector was the one enjoying significant profits.Yet, according to Van Zyl, the sector only supported and benefited a small concentrated group of Namibians.By spending on education, development and health, Van Zyl said Kuugongelwa-Amadhila was aiding the poor, who were expected to benefit from her move.”The budget definitely focused on the distribution of wealth, which is a very positive thing.”He said a budget deficit was expected given the current economic situation of high oil prices and high inflation rates, among other influencing factors.He said since the Minister confirmed that revenue collection had improved, it would have been good to increase the current tax threshold of N$36 000 a year.”I would have liked to see the threshold increased to between N$40 000 and N$45 000 to help the already burdened low-income earners,” he said.He added that since South Africa had cut its corporate tax to 28 per cent, he had expected the Minister to follow suit and drop the Namibian rate from the current 35 per cent, which he described as uncompetitive.Income tax on profit went up from N$5 billion to N$6,6 billion – which is a 28 per cent increase.Kotze’s sentiments were echoed by Emile van Zyl of Simonis Storm Securities.He said it was a letdown that there was no tax relief for individuals.”Except last year, nothing much has been done in the recent years to lessen the burden on the taxpayers and to shield them from situations like rising inflation,” he said.Both economists, however, added that the Minister might have held out on tax relief as a cautionary measure for the long term, as Sacu revenue is expected to decrease over time.Van Zyl commended the Minister for her bold stance on spending, saying this was pro-poor.He explained that currently the mining sector was the one enjoying significant profits.Yet, according to Van Zyl, the sector only supported and benefited a small concentrated group of Namibians.By spending on education, development and health, Van Zyl said Kuugongelwa-Amadhila was aiding the poor, who were expected to benefit from her move.”The budget definitely focused on the distribution of wealth, which is a very positive thing.”He said a budget deficit was expected given the current economic situation of high oil prices and high inflation rates, among other influencing factors.