Tax relief promises have not been kept

ELEVEN months, one week and five days after Finance Minister Saara Kuugonglewa-Amadhila promised Namibians tax breaks of N$800 million to help them ‘weather the storm’, most of the relief has yet to become effective.

The consumer still has to pay 15 per cent value added tax (VAT) on sugar and milk.Homebuyers continue to pay thousands more in transfer duties than they would have, had Kuugongelwa-Amadhila kept her word.Namibians who lost their jobs during the recession, only got N$100 000 of their retrenchment packages tax-free, and not N$300 000 as promised by the Minister.Of all the tax lifelines announced by the Minister in her 2009-10 Budget speech on March 19 last year, only the personal income tax relief, valued by economists at around N$60 million, has been implemented.The amendments to both the VAT Act and the Transfer Duty Act have already been approved by the Cabinet Committee on Legislation last October. Cabinet also gave its go-ahead to the changes at its first meeting on January 26.Kuugongelwa-Amadhila, however, has yet to table these amendments in Parliament.At the beginning of the current parliamentary session, the Office of the Speaker issued a statement saying that the National Assembly will discuss ‘any other urgent matter of national concern that might come from the floor of the House’.Not a word has been said about tax relief yet. Instead, parliamentarians have been discussing pension fund changes for themselves, defence and gender policies and the NBC. They also approved NDF troops to be sent to Chad.Empty budget promises were a talking point yesterday at a pre-budget briefing for civil society by the Institute of Public Policy Research (IPPR) and the Namibia Non-Governmental Organisations’ Forum (Nangof).IPPR Executive Director Graham Hopwood said it was important that civil society monitors the budget throughout the year to make sure that the Minister lives up to her promises.Gerda Brand, Associate Director of Taxation Services at Deloitte Namibia, put the relief of amended transfer duties into perspective.On a house of N$450 000, a buyer currently pays N$15 000 in transfer duties. Had the Minister’s tax break been implemented, the amount would only have been N$500.If the changes had been gazetted, a buyer would have saved N$43 800 in transfer duties on a house of N$960 000; N$51 000 on a house of N$1,2 million and N$60 000 on a house of N$1,6 million.Nothing has come of the increased full lump sum tax-free pension payout either. The Minister promised that no tax would be deducted on full benefits less than N$50 000 from March. As legislation was not amended, only full benefit pension payouts of N$20 000 are currently tax free.The private sector was also supposed to benefit from Kuugongelwa-Amadhila’s tax breaks. Corporate tax for non-mining companies would be dropped from 35 per cent to 34 per cent, she announced.In their 2009-10 budget analysis, IJG Securities estimated that this would have meant a welcome injection of between N$260 million and N$300 million into the business sector during the financial crisis. The Minister’s undertaking, once again, has not found its way to Parliament as draft legislation yet.Although Kuugongelwa-Amadhila’s personal tax breaks were gazetted in September and backdated to last March, analysts believe it didn’t really benefit the poor.The Minister raised the threshold for those not paying tax from N$36 000 a year to N$40 000 a year. Those earning less than N$36 000 a year, however, don’t benefit at all as they didn’t pay tax to start with.jo-mare@namibian.com.na