Informal tax raises ire

The Chinese traders are the ones who should be paying taxes and not the informal sector, says the official opposition's youth league.

13 July 2018 | Politics

The Popular Democratic Movement (PDM) youth wing has called on government to rather focus on tax-dodging businesses, including forcing the Chinese to pay tax, instead of going after the informal sector.

It also has warned the country's informal sector has not developed to the economic and technical levels required to adequately and fairly tax it, without significantly collapsing the market and creating massive employment.

PDM Youth League spokesperson Maximalliant Katjimune was responding yesterday to moves by Inland Revenue to introduce a so-called presumptive tax targeting the informal sector.

He called the development misguided.

“What the minister of finance and the Inland Revenue Directorate must focus on is taxing big businesses that have been evading the government's tax books for years. The government must also step up efforts to properly tax Chinese businesses who are operating in the country,” Katjimune said.

He said the introduction of a presumptive tax regime would hurt the informal sector and the economy as a whole.

Inland Revenue commissioner Justus Mwafonge this week said the introduction of a presumptive tax regime was not a new development, as individuals who earn more than N$50 000 per annum are in any case required to pay taxes. “This is nothing new. Informal traders have always been taxed. It will all depend on how the business is registered. This is nothing new,” Mwafonge said.

He was responding to questions about a pamphlet published and distributed by the finance ministry, which warns explicitly that hair salons, whether operated in a city centre, town, informal market, incubator centre or at home, are subject to tax.

The same applies to taxi and bus transport businesses, as well as hawkers, whether they sell their products door to door, at an open market, on the side of the road, under a tree, in a neighbourhood or from the boot of a car.

“Plumbing services, if you have people who call you to fix their broken taps and pipes for a fee, record such income and pay tax. Kapana sellers, if you roast meat and sell it, you are required to pay tax on such income,” the pamphlet reads further.

According to Mwafonge the pamphlet campaign was also the ministry's way of informing taxpayers, while educating them on their tax responsibilities.

“We are just trying to simplify things,” he said.

He said there is also a slim possibility that the ministry of finance would introduce presumptive taxes soon. According to him, a lot of work still needs to be done before it is implemented.

“Presumptive tax is still a work in progress,” Mwafonge said.

Government first mooted the idea of a presumptive tax regime when then finance minister and current Prime Minister Saara Kuugongelwa-Amadhila tabled the 2014/15 national budget.

The incumbent, Calle Schlettwein, has maintained the introduction of presumptive tax regime would be an attempt to broaden the tax net. According to him, the measure is also not punitive.


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