Revised land tax proposed
Land reform minister Utoni Nujoma says that the land tax approved by the Valuation Court last year could adversely affect the land reform programme.
The Ministry of Land Reform has revised the land tax rates for commercial land in Namibia, with a slight decrease for both Namibian and foreign landowners.
Land reform minister Utoni Nujoma tabled the proposed new land tax rates in the National Assembly for approval this week.
The land tax for Namibians was revised from 0.75% to 0.4% and to 1.4 % from 1.75% for foreign nationals for the first piece of agriculture land owned.
It is further proposed that the progressive rate of land tax for additional farms owned by the same owner remains the same as before at 0.25% in either case.
Nujoma said the annual amount of land tax expected to be collected on the revised rates will be N$80 million.
“This is twice the current amount that is supposed to be collected annually in terms of land tax paid.”
According to Nujoma the prevailing rates of land tax were last determined and approved by the National Assembly in 2004 on the basis of nationality and the number of farms owned by an individual.
Nujoma said that valuations of unimproved farmland approved by the Valuation Court in 2016 were three to four times the values of the land in 2007. This meant farmers also had to pay three to four times the amount of land tax should the rate of land tax remain at the 2004 level, he added.
Such a position may not be suitable for the agricultural sector which employs a significant number of Namibians, according to Nujoma.
According to him, the ministry interrogated the implications of maintaining the current rates of land tax that is chargeable on commercial land.
“It was found that if the rates are not revised the price at which government will be purchasing land in the future will be high because land owners are likely to inflate the offer prices in order to recover the cost of a high land tax.”
He said this has the potential of negatively affecting the current land reform target of acquiring five million hectares by 2020. Similarly 10 million hectares are to be acquired through the Affirmative Action Loan Scheme by 2020.
According to him a high land tax is likely to contribute to the widening gap between farm prices and mortgage loan amounts that can be advanced to applicants and thereby make it unfavourable for those who wish to acquire land through this avenue.
He said the ministry is directed to amend the current land tax regime to be more progressive in order to entice those owners with more land to offer it to government.
“The revised rates of land tax that I have just tabled places the burden of paying more land tax to those who own more land.”
He said the ministry also considered the viability of the agricultural sector and the impact that the high land tax would have on the viability of farming activities in the short and long term as well as the impact on employment levels in the sector.
A high land tax will be able to increase funding for acquisition and simultaneously accelerate the land reform process. However, this is not sustainable in the long term as the issue of affordability and sustainability of a high land tax is more likely to lead to high levels of non-payment making the whole process counterproductive, said Nujoma.
“We should remember not to kill the goose that lay the golden egg through levying unsustainable taxes.”
The proposed tax revision was postponed to 26 September for debate.
ELLANIE SMIT
Land reform minister Utoni Nujoma tabled the proposed new land tax rates in the National Assembly for approval this week.
The land tax for Namibians was revised from 0.75% to 0.4% and to 1.4 % from 1.75% for foreign nationals for the first piece of agriculture land owned.
It is further proposed that the progressive rate of land tax for additional farms owned by the same owner remains the same as before at 0.25% in either case.
Nujoma said the annual amount of land tax expected to be collected on the revised rates will be N$80 million.
“This is twice the current amount that is supposed to be collected annually in terms of land tax paid.”
According to Nujoma the prevailing rates of land tax were last determined and approved by the National Assembly in 2004 on the basis of nationality and the number of farms owned by an individual.
Nujoma said that valuations of unimproved farmland approved by the Valuation Court in 2016 were three to four times the values of the land in 2007. This meant farmers also had to pay three to four times the amount of land tax should the rate of land tax remain at the 2004 level, he added.
Such a position may not be suitable for the agricultural sector which employs a significant number of Namibians, according to Nujoma.
According to him, the ministry interrogated the implications of maintaining the current rates of land tax that is chargeable on commercial land.
“It was found that if the rates are not revised the price at which government will be purchasing land in the future will be high because land owners are likely to inflate the offer prices in order to recover the cost of a high land tax.”
He said this has the potential of negatively affecting the current land reform target of acquiring five million hectares by 2020. Similarly 10 million hectares are to be acquired through the Affirmative Action Loan Scheme by 2020.
According to him a high land tax is likely to contribute to the widening gap between farm prices and mortgage loan amounts that can be advanced to applicants and thereby make it unfavourable for those who wish to acquire land through this avenue.
He said the ministry is directed to amend the current land tax regime to be more progressive in order to entice those owners with more land to offer it to government.
“The revised rates of land tax that I have just tabled places the burden of paying more land tax to those who own more land.”
He said the ministry also considered the viability of the agricultural sector and the impact that the high land tax would have on the viability of farming activities in the short and long term as well as the impact on employment levels in the sector.
A high land tax will be able to increase funding for acquisition and simultaneously accelerate the land reform process. However, this is not sustainable in the long term as the issue of affordability and sustainability of a high land tax is more likely to lead to high levels of non-payment making the whole process counterproductive, said Nujoma.
“We should remember not to kill the goose that lay the golden egg through levying unsustainable taxes.”
The proposed tax revision was postponed to 26 September for debate.
ELLANIE SMIT
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