Finance minister Calle Schlettwein yesterday said those who owe the government money in unpaid taxes have six months to apply to have their debts written off.
Addressing the media in Windhoek, Schlettwein also said there will be no budget cuts during the 2017/18 financial year. The programme applies to the taxes administered by the Inland Revenue Department: Income Tax, Value Added Tax, VAT Import, Employees Tax, Stamp Duty and Non-resident Shareholders Tax.
Taxpayers owe government about N$19 billion of which N$4 billion is principal debt and N$15 billion interest and penalties incurred. Schlettwein announced last year in December that the government would write-off the interest and waiver 80% of the penalties if those indebted pay the principal debt.
He said those who owe the government have between February and July to apply after taxpayers determined how much they owe and filing all outstanding tax returns. “Payments may be made in instalments over a maximum period of six months and the last instalment must be made on 31 July 2017,” he said. Penalties and interest paid prior to the effective date of the programme are not refundable while taxpayers currently on a deferred payment plan can still apply to participate in the tax programme.
He said arrear tax amounts relating to pending cases of fraud, illicit tax practices and corruption are not eligible for the programme. “Taxpayers who fail to apply to the finance ministry to have a portion of the interest written off during the period allocated will forfeit this benefit when the incentive programme lapses,” Schlettwein said. The ministry, he said, will then enforce its collection mandate against taxpayers with outstanding balances on their tax accounts as if the programme was never introduced.
Application forms for the incentive programme will be available at all regional revenue offices countrywide and must be duly completed and submitted to the nearest receiver of revenue office. Meanwhile, Schlettwein said there will be no budget cuts during the 2017/18 financial year because the government is confident that they have rebalanced the budget to sustainable levels.
“The commitment is to keep public finances at sustainable levels and we will do that with the least possible pain. I think we can be cautiously optimistic that we are on the improving side again,” Schlettwein said. However, Schlettwein said because Namibia is still a small open economy and there can be externally induced events that are unforseen or not properly covered for now. He reassured the nation that government is not broke and remains committed in honouring its outstanding debts.
He also said the revised 2016/17 budget is fully-funded, with funding smoothly spread out over the financial year and the expenditure execution to date of 75% suggests that government is well on course to fully execute the budget.
“You are broke when your total assets including liquid assets are less than your debt. We are far from that.”The minister said although the country experienced a recession which was caused by a number of events leading to liquidity problems, they have managed it. “We got out of the problem and we are actually okay. It is not to say we are not in a tight situation but we are able to honour our debts,” Schlettwein said. He said the budget deficit has been reduced from 9,1% to 6,3% in the current year, with the mid-year review target to further reduce the budget deficit close to 3% in the next financial year.
Schlettwein said this is a measure to stabilise and eventually reduce growth in public debt. Although our debt levels have increased and we put measures into place to bring it down to 35% of GDP, it is noteworthy to emphasise that relative to some other economies in the region, for instance South Africa, whose indebtedness is estimated at 51,4% of GDP for 2016, and Angola's around 72% of GDP,” he said.
Schlettwein said the prospects for 2017 are moderately promising and they see the green shoots budding for several reasons. “Commodity prices, both for metal and non-metal commodities, show signs of recovery, which augurs well for the generality of the mining sector.
“Equally, early rain showers offer good prospects for the agricultural sector, but the volumes to date only call for cautious optimism,” he said. Schlettwein said the tourism sector remained strong while the improvements in commodity prices are expected to support the export sector. The minister said he intends presenting his 2017/18 national budget not later than the second week of March 2017.