Tax relief crucial for lower earners – analysts

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Tax relief crucial for lower earners - analysts
Tax relief crucial for lower earners - analysts

Africa-Press – Namibia. As finance minister Iipumbu Shiimi prepares to table the 2024/25 budget in the National Assembly today, analysts have called for tax exemption for lower-income groups and general tax relief. This, the pundits believe, could potentially increase government revenue and could provide much-needed relief at household level. These were some of the sentiments shared last week when economic experts attended a pre-budget public debate under the theme ‘The National Budget in an Election Year: Prospects for Fiscal Expansion and Strategic Priorities’.

The event was organised by the Economic Association of Namibia (EAN), in collaboration with the Capricorn Group, High Economic Intelligence (HEI), and GIZ Namibia.

At the occasion, experts discussed a variety of themes, including young unemployment, national debt, and tax reforms, among others.

“If you free up some spending at the lower end, those people will spend in the economy and government will get revenue. I’m a big proponent of saying at the bottom end of the tax scale we need to exempt the people from paying income tax.

At the top end, we are sitting at 37%. The minister should increase the rate because the rich people will not suffer that much.

We need to be cognisant of the big-time bomb that we are sitting on,” said Cameron Kotze, risk and compliance manager at Namib Mills.

Kotze added that currently, Namibia is sitting with a relatively high corporate tax rate, and the country’s tax tables for individuals have not been amended for several years now, hence there is a lot of money caught up in the tax system.

At the same occasion, group economist at RMB Namibia, Ruusa Nandago said tax relief for individuals will be a welcomed development as it will ease the pressure on lower-income households from the accelerated inflation seen over the past two years. Secondly, she noted there is an expectation of reducing the corporate tax rate from 32.0% to 31.0%. This, she said, is a good first step to making Namibia a more competitive environment for investment.

Also, local economist Omu Kakujaha Matundu said Namibia should utilise low-hanging fruits to expand economic growth and consequently expand the tax base. With an expanded tax base and increased revenue, he noted the country will have sufficient liquidity in its coffers.

Also sharing his expectations on today’s budget, independent economist, Josef Sheehana stated that tax reform is another area where markets will be hoping for a change.

“Currently, businesses pay taxes on their profits but at the same time, the shareholders are also taxed on their dividends, resulting in double taxation. Changes to rectify this anomaly can be awaited, with reforms to make dividends tax-free for shareholders,” Sheehama stated.

He further advised that Namibia’s pension payout tax percentage must be revisited, stating: “The tax reforms would create resilience against uncertainty and higher inflation, and increase the global competitiveness of Namibia by attracting investment. In the current global climate, many countries are increasing taxes or asking their citizens to carry greater burdens. Hence, Namibia can cut taxes to encourage investment or at the very least not raise them. Therefore, a lot more good jobs could be created if Namibia simply did a better job of not excessively taxing, spending, or regulating”.

Meanwhile, Shiimi in his 2023/24 financial year budget statement said the non-mining company tax rate will be reduced by two percentage points over the two outer years of the medium-term expenditure framework.

“Accordingly, the tax rate will be reduced to 31% effective on 01 April 2024, with a further reduction to 30% on 01 April 2025, as communicated during the FY2022/23 mid-year budget review, the ministry has undertaken an assessment of the consideration to provide tax relief to low-income earners. In this regard, we have resolved to introduce tax relief for individuals in the N$50 000 to N$100 000 tax bracket, effectively reducing their tax rate to zero effective in FY2024/25,” said Shiimi at the time.

Currently, Namibia individual income tax brackets are:

Not taxable: If your income falls between N$0 and N$50 000.

18%: For each Namibian dollar (N$) above N$50 000 up to N$100 000.

N$9 000 + 25%: For each N$ above N$100 000 up to N$300 000.

N$59 000 + 28%: For each N$ above N$300 000 up to N$500 000.

N$115 000 + 30%: For each N$ above N$500 000 up to N$800 000.

N$205 000 + 32%: For each N$ above N$800 000 up to N$1 500 000.

N$429 000 + 37%: For each N$ above N$1 500 000

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