Tax bonus saves fiscus

Bigger income and higher disability grants as well as promises of tax breaks and increased monthly state pensions marked finance minister Iipumbu Shiimi’s mid-year budget review yesterday, as he pumped total expenditure for 2022/23 up by nearly N$4 billion.“The primary focus of fiscal policy in the near- to medium-term is to shield the economy from the impact of the spike in international energy and food prices,” Shiimi said, referring to the devastating spill-overs stemming from Russia’s invasion of Ukraine.The minister could afford being generous, as revenue estimations for the current fiscal year increased by about N$4.4 billion to N$64.1 billion, mainly on the back of corporate tax of mining and non-mining companies, stronger income tax collections, value-added tax and dividends.This windfall also allowed Shiimi to lower the deficit forecast from nearly N$11.1 billion to about N$10.6 billion.Total debt for 2022/23 is estimated at nearly N$138.4 billion, down from about N$140.2 billion in the main budget tabled in March.Grants to increaseThe total operational budget now stands at nearly N$60.1 billion compared to the N$56.6 billion in the main budget. Of this, about N$1.25 billion is for the salary increases of civil servants agreed to recently to avert a nationwide strike.In addition, N$747.4 million more of personnel expenditure was granted, the bulk of which will go to health and social services as well as education, arts and culture to cater for projected shortfalls on recruitment.Also included is N$5.2 million extra so the ministry of gender equality, poverty eradication and social welfare can increase the monthly conditional income grant for former food bank recipients from N$500 to N$600, effective this month.Additional funding of N$97 million has been incorporated to increase the disability grant for beneficiaries under the age of 18 from N$250 to N$1 300. This will only become effective in the 2023/24 budget year.Provision has also been made to increase the monthly old age grant and the disability grant, as well as the orphan and vulnerable children grant by N$100 effective in 2023/24, “should resources permit”, Shiimi said.Tax breaksThe tax rate for non-mining companies will be reduced by two percentage points over the two outer years of the next medium-term expenditure framework. The rate will be reduced to 31% effective in 2024/25, with a further reduction to 30% in 2025/26.Shiimi said the finance ministry will undertake an assessment of the consideration to increase the threshold for income tax on individuals from the current N$50 000 to N$100 000, with a view to provide relief to low-income earners.The Income Tax Amendment Bill contains proposals for increasing the deductibility on pension fund contributions and educational policy deductions to a maximum of N$150 000, and provisions for thin capitalisation rules, amongst other things.According to Shiimi, the Bill is currently with legal drafters, after which it will be tabled in the National Assembly this financial year.The Value-Added Tax Amendment Bill is also before legal drafters before it is tabled this financial year.It incorporates zero rating on the supply of sanitary pads, among other things, he said.Operational expenditureAn amount of N$706 million has been allocated to the National Census to be undertaken in 2023/24.A total of N$88 million is available for preparations for the presidential and national assembly elections in November 2024, as well as the regional councils and local authority elections in November 2025.An additional N$531.1 million was granted to subsidies and other transfers to government organisations to cover, among other things, shortfalls on student funding at the Namibia Students Financial Assistance Fund (NSFAF) and the refurbishment of locomotives for TransNamib.A total of N$872.9 million has been added on the goods and services budgets of various votes to cover – among other things - projected shortfalls on utilities, funding to combat the outbreak of foot and mouth disease and lung sickness, as well as to broadly stem the erosion of purchasing power in light of heightened inflation, particularly on transport, Shiimi said.Capital projectsIn contrast to previous years, the development budget was increased in the mid-year budget review.The additional N$497.7 million will cater to outstanding invoices and potential shortfalls on critical ongoing projects to ensure continuity and avoid further penalties on road projects, the minister said.Included in the extra money is N$33 million for defence under its classified research and development project. The Office of the President will receive an additional N$15 million to complete the Hosea Kutako shrine project.Meanwhile, the massive land servicing programme will get N$75 million more, while N$25 million extra is earmarked for projects by the Namibia Industrial Development Agency (Nida).Fisheries and marine resources, as well as higher education, technology and innovation each got N$10 million extra.Works and transport received N$449 million more for road projects and to revamp the apron at the Hosea Kutako International Airport.

Tax bonus saves fiscus

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Namibian Sun 2023-02-08

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Tax bonus saves fiscus

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Namibian Sun 2023-02-08

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