Churches and NGOs stunned by tax move
Churches and NGOs stunned by tax move

Churches and NGOs stunned by tax move

Charitable organisations and churches say paying income tax would prevent them from providing much-needed social services that the government cannot provide.
Ogone Tlhage
A plan to have religious, non-governmental organisations and charities file tax returns and pay taxes on income received through commercial activities has met opposition, with commentators saying this is being done without logic and consideration of the tough economic conditions all entities are currently going through.

Finance minister Calle Schlettwein said during the tabling of the 2018/19 budget on Wednesday that plans are in place to tax the commercial activities of welfare organisations and that they should register as taxpaying entities.

African Methodist Episcopal (AME) pastor Maria Kapere felt the ministry of finance should have consulted church organisations before the planned introduction of the tax measure.

According to Kapere, during her time with the Council of Churches in Namibia (CCN), efforts were always made to engage the government on issues of national interest, particularly in the area of social development.

“The churches should have been consulted on this move. Churches never get any type of assistance from government. Take the example of the Dutch Reformed Church, which had the assistance of the former South African apartheid government,” Kapere said.

“Government does not offer any type of support but if you look at the mainstream churches, they have always contributed towards social development issues and we do not get help from government.”

Kapere said she was surprised.

“I cannot understand on what grounds this tax is being introduced,” she said.

SPCA Namibia manager Monique Redecker said welfare organisations were struggling to keep afloat. The introduction of a tax, she felt, would make it more difficult for welfare organisations to survive.



“We are very upset about the planned introduction of the tax,” said Redecker.



“We are a welfare organisation that only depends on donations and we are barely surviving as it stands. We do not have the money to pay tax.”



Taxes would be an additional burden, Redecker said.



“This additional burden is unacceptable; they are now going to tax people that are suffering. We cannot understand why non-governmental organisations are going to be taxed, this is really beyond understanding,” Redecker said.



Legal Assistance Centre director Tony Hancox said NGOs were providing vital services, some of which the government could not provide.



Money received by NGOs either through donations or commercial activities contribute to funding their operations, Hancox said.



“In our view any funds obtained (whether from commercial activities or not) which are utilised purely for the objectives of the NGO, should not be taxed. NGOs are not profitmaking entities. As it is, NGOs in Namibia play a vital part in providing services, some which should actually be provided by government,” Hancox said.



She added the current economic climate did not make it conducive for a tax to be introduced and said she hoped the motion would not be supported.



“NGOs are already struggling to source sufficient funds in this difficult economic climate and this places a further burden on them and may result in them not being able to sustain themselves. Ultimately this will be to the detriment of all those who rely on NGOs for assistance in any number of ways. We would urge parliament not to approve such a motion,” Hancox said.



Institute of Public Policy Research director Graham Hopwood also felt consultation was key before the move was announced by Schlettwein.



“It would be good if such moves were based on consultation with non-profit bodies rather than just announced in the budget.



“However, it is fair for government to tax commercial activities that may be carried out by a non-profit body.



“In the broader sense, government should talk to NGOs and come up with supportive policies. Civil society in Namibia is currently in crisis and this has a lot to do with the funding situation,” said Hopwood.



Announcing the measure in the National Assembly during the tabling session, Schlettwein said tax registration would soon be required for Section 16 listed organisations.



He said the government planned to subject income derived from commercial activities by charitable, religious, educational and other types of institutions under Section 16 of the Income Tax Act to normal corporate tax.



“Such institutions will be required to register as taxpayers and file annual income tax returns,” Schlettwein said in the National Assembly yesterday.





OGONE TLHAGE

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Namibian Sun 2024-05-04

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