- The Leader of the Opposition quoted out of context Sir Winston Churchill of the United Kingdom as a critic of increased taxation, but I must point out that the UK VAT rate is much higher at 20%. In the UK and Ireland, there is a reduction in housing benefit if you have spare bedrooms; bedroom tax.
- Hon. Autlwetse even suggested to bring back the hut tax.
- Regarding the comment that this budget is for the rich, kindly note the following:
- Household expenses on the following basic foodstuffs and other items are exempted from VAT (these are just examples; the list is longer than this):- Sorghum/ maize meal Rice, Flour Samp, Sugar Milk, bread Drugs, vegetables Domestic transport, fruits Education services, Some agric. Implements, etc. Water (WUC)
- A full list of supplies zero-rated and exempted from VAT is provided as Annex A.
- The income tax system in Botswana is progressive, meaning that higher income earners pay a higher tax as per the 8th Schedule of the Income Tax Act.
- We have also raised the threshold at which income earners become liable to pay income tax from P36,000 per annum (P3000 per month) to P48,000 per annum (P4000 per month) in order to reduce the tax obligations for taxpayers. The total number of taxpayers who will be removed from the BURS tax register, i.e. those who will not pay tax as a result of this dispensation will be 26,975. The amount of tax forgone will be about P100 million per annum.
- Further, we have announced a tax amnesty during the coming tax year to further reduce the tax burden on individuals and companies.
- Total amount owed at the moment is P7.8 billion, comprising principal of P3 billion and interest & penalties of P4.8 billion.
- Therefore, P4.8 billion is the amount to be foregone by Government through this dispensation. Just like the adjustment of the income tax threshold, this directly leaves money into the pockets of taxpayers.
- Contrary to some comments made here, this benefits every taxpayer regardless of their level of income.
- Overall, we anticipate to raise P64.6 billion in total revenues and grants in the 2021/2022 financial year.
- In terms of expenditures, it’s important to note that the country is still in need of roads, schools, hospitals, storm-water drainage, etc, against limited resources.
- There is need to seriously review social welfare issues and address double or multiple dipping and means testing is all our support programmes such as drought support, school fees, LIMID/ISPAAD, etc
- The bulk goes to the recurrent budget with P56 billion or 79.4%, which includes salaries and pensions of P28.8 billion, grants and subventions of P15 billion and other government running costs of P10.7 billion.
- Grants and subventions include revenue support grants to Local Authorities, tertiary student bursaries and subventions to SOEs.
- Given the large share of salaries and pensions in the recurrent budget, any fiscal reform has to deal with the wage bill. This is a brutal fact, hence reference in the Budget Speech to abolish vacant posts and restructure the public service.
- Other government running costs termed “other charges” constitutes costs such as payment of utilities and maintenance of the government fleet, etc.
- The restructuring of the public service will be concluded in consultation with public sector unions.
- Regarding SOEs, it was important to have a comprehensive review before any major decisions and a report has now been produced, to be considered by Cabinet Committee including Hon. Serame, Hon. Mzwinila, Hon. Molale and Hon. Makwinja.
- The development budget for 2021/2022 is proposed at P14.75 billion but we need to emphasise value for money and improve expenditure outcomes
- We urgently need to address the issue of 37% in spending going to waste
- Budget allocations: Some Members expressed their views on how best the allocation to Ministries could be done, especially to reflect COVID-19 and give health more. The budget allocation for MOHW has catered for COVID-19 expenses.
- Total expenditure and net lending is proposed at P70.6 billion for the 2021/2022 financial year
- Given the shortfall of revenues to finance the budget as indicated by the budget deficit of P6 billion, we need to have a financing plan
- This means that even with the proposed increases in taxes, we will not raise enough money to finance the proposed expenditures
- With regards to borrowing, the request will be brought to Parliament for consideration whereas a P30 billion domestic bond issuance programme has already been approved by Parliament.
- Suggestions of money not accounted for, specifically the drop in the Government Investment Account (GIA) by P12 billion between December 2019 to November 2020.
- Need to clarify that with total revenues of P46.5 billion, against total expenditure of P60.9 billion, government was compelled to draw from its savings an amount of P12 billion to finance its operations, including the development budget, while avoiding large borrowings.
