Spent consumer drains Receiver's tax coffers

Higher unemployment, less wages and lower household income are likely to increase bankruptcies, liquidations and auctions, analysts say.
Jo-Mare Duddy Booysen
Jo-Maré Duddy – Only about N$1.979 billion from taxes on products, mainly value-added tax (VAT), was generated in the second quarter of this year, the lowest amount since the second quarter of 2014.

Taxes on products have now recorded eight consecutive quarters of negative growth.

The latest figures released by the Namibia Statistics Agency (NSA) show product tax dropped by N$75 million or 3.7% from the first to the second quarter. Compared to the second quarter in 2017, the tax fell by N$116 million or 5.5%.

Commenting on the new GPD stats, Klaus Schade, research associate of the Economic Association of Namibia (EAN), said unless revenue from other tax sources and non-tax sources has increased, the figures suggest that it might be challenging to achieve the fiscal targets.

Budget documents tabled by finance minister Calle Schlettwein in March target an estimated N$13.3 billion from domestic taxes on goods and services in the current fiscal, which started at the beginning of the second quarter. This target will help Schlettwein to contain the budget deficit for 2018/19 at about N$8.3 billion and limit total debt to an estimated 45% of gross domestic product (GDP).

The slump in taxes on products is a reflection of the depressed consumer, the bust in the wholesale and retail sector and the overall economic recession. Wholesale and retail in the second quarter spent its seventh consecutive quarter in the red, while the overall economy has recorded nine consecutive quarters of negative growth.

‘Anaemic growth’

“Namibia has had an anaemic growth for a prolonged period and we desperately need the economy to strengthen,” Simonis Storm (SS) analyst Indileni Nanghonga reacted to the latest growth figures.

Higher unemployment, less wages and lower household income are likely to increase bankruptcies, liquidations and auctions, Nanghonga said. “Education, private capital investments and economic opportunities are all likely to suffer in the current downturn, and the effects will be long-lived,” she said.

In addition, SS expects higher budget deficits, low revenue - tax collections, inflows from the Southern African Customs Union (SACU), VAT and income tax - and lower capital spending, whilst operational expenditure persists.

SS currently forecasts economic growth of 0.6% for 2018, followed 1.8% next year.

“Economies often see rapid growth during recovery periods (as unused capacity is returned to work), but the drag due to the long-term damage will still prevent the recovery from reaching its full potential over the next three years,” Nanghonga said.

“We have had 28 years of prosperity, the world had at least two recessions during that time, and we are just catching up.”

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Namibian Sun 2024-03-28

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Nam 2.22 SAME | Oryx Properties Ltd 12.1 UP 1.70% | Paratus Namibia Holdings 11.99 SAME | SBN Holdings 8.45 SAME | Trustco Group Holdings Ltd 0.48 SAME | B2Gold Corporation 47.34 DOWN 1.50% | Local Index closed 677.62 UP 0.12% | Overall Index closed 1534.6 DOWN 0.05% | Osino Resources Corp 19.47 DOWN 2.41% | Commodities: Gold US$ 2 198.29/OZ UP +0.34% | Copper US$ 3.97/lb DOWN -0.0031 | Zinc US$ 2 440.90/T DOWN -0.64% | Brent Crude Oil US$ 86.57/BBP UP +0.21% | Platinum US$ 895.17/OZ UP +0.03% Sport results: Weather: Katima Mulilo: 19° | 37° Rundu: 17° | 33° Eenhana: 18° | 33° Oshakati: 20° | 31° Ruacana: 19° | 33° Tsumeb: 17° | 29° Otjiwarongo: 16° | 28° Omaruru: 18° | 31° Windhoek: 17° | 28° Gobabis: 17° | 28° Henties Bay: 16° | 19° Wind speed: 24km/h, Wind direction: S, Low tide: 10:54, High tide: 04:57, Low Tide: 22:58, High tide: 17:16 Swakopmund: 15° | 17° Wind speed: 29km/h, Wind direction: SW, Low tide: 10:52, High tide: 04:55, Low Tide: 22:56, High tide: 17:14 Walvis Bay: 16° | 22° Wind speed: 33km/h, Wind direction: SW, Low tide: 10:52, High tide: 04:54, Low Tide: 22:56, High tide: 17:13 Rehoboth: 18° | 29° Mariental: 22° | 32° Keetmanshoop: 21° | 34° Aranos: 21° | 31° Lüderitz: 15° | 29° Ariamsvlei: 23° | 34° Oranjemund: 15° | 21° Luanda: 27° | 30° Gaborone: 20° | 32° Lubumbashi: 17° | 24° Mbabane: 15° | 23° Maseru: 12° | 28° Antananarivo: 16° | 27° Lilongwe: 17° | 29° Maputo: 20° | 28° Windhoek: 17° | 28° Cape Town: 17° | 23° Durban: 21° | 25° Johannesburg: 18° | 28° Dar es Salaam: 26° | 32° Lusaka: 18° | 30° Harare: 15° | 31° Economic Indicators: Currency: GBP to NAD 24 | EUR to NAD 20.57 | CNY to NAD 2.64 | USD to NAD 19.1 | DZD to NAD 0.14 | AOA to NAD 0.02 | BWP to NAD 1.33 | EGP to NAD 0.39 | KES to NAD 0.14 | NGN to NAD 0.01 | ZMW to NAD 0.74 | ZWL to NAD 0.04 | BRL to NAD 3.8 | RUB to NAD 0.2 | INR to NAD 0.23 | USD to DZD 134.49 | USD to AOA 832.63 | USD to BWP 13.71 | USD to EGP 47.29 | USD to KES 131.48 | USD to NGN 1415.13 | USD to ZAR 19.1 | USD to ZMW 24.97 | USD to ZWL 321 | Stock Exchange: JSE All Share Index 73909.5 Up +0.41% | Namibian Stock Exchange (NSX) Overall Index 1516.02 Down -0.13% | Casablanca Stock Exchange (CSE) MASI 12981.98 Up +0.34% | Egyptian Exchange (EGX) 30 Index 28224.37 Down -2.87% | Botswana Stock Exchange (BSE) DCI Same 0 | NSX: MTC 7.75 SAME | Anirep 8.99 SAME | Capricorn Investment group 17.34 SAME | FirstRand Namibia Ltd 49 DOWN 0.50% | Letshego Holdings (Namibia) Ltd 4.1 UP 2.50% | Namibia Asset Management Ltd 0.7 SAME | Namibia Breweries Ltd 31.49 UP 0.03% | Nictus Holdings - Nam 2.22 SAME | Oryx Properties Ltd 12.1 UP 1.70% | Paratus Namibia Holdings 11.99 SAME | SBN Holdings 8.45 SAME | Trustco Group Holdings Ltd 0.48 SAME | B2Gold Corporation 47.34 DOWN 1.50% | Local Index closed 677.62 UP 0.12% | Overall Index closed 1534.6 DOWN 0.05% | Osino Resources Corp 19.47 DOWN 2.41% | Commodities: Gold US$ 2 198.29/OZ UP +0.34% | Copper US$ 3.97/lb DOWN -0.0031 | Zinc US$ 2 440.90/T DOWN -0.64% | Brent Crude Oil US$ 86.57/BBP UP +0.21% | Platinum US$ 895.17/OZ UP +0.03%