THE Lesotho Revenue Authority (LRA) has failed to meet the government’s set target for tax collection by 6.7 percent in the financial year which ended on 31 March 2017.
While the M5.9 billion collected by the revenue collection agency in the 2016/17 financial year is slightly more than the M5.8 billion collected the previous year, it missed the M6.4 billion target by M430.8 million.
Addressing a media briefing on Friday, Finance Minister Tlohang Sekhamane said the LRA collected revenue through income tax, value added tax (VAT) as well as the Alcohol and Tobacco Levy which missed their set targets by 7.3 percent, 4.3 percent and 100 percent respectively.
He said the 2016/17 financial year was the second time the LRA missed the set target since its establishment in 2003. The first time was in the 2013/14 financial year when the agency fell short by M644.8 million, which was 12.7 percent.
The minister also explained that this year’s income tax of M3.7 billion was impacted by the poor performance of Company Income Tax (CIT).
For its part, the CIT was hamstrung by the lacklustre performance of the mining sector which contributes up to 30 percent of its overall collections.
“The unsatisfactory performance of the mining sector was largely due to unfavourable global diamond prices,” Mr Sekhamane said.
“Other factors include the appreciation of the South African rand which negatively impacted on the value of diamond exports, and bad weather, which resulted in increased production costs.”
He said VAT collection fell short of the mark because of non-compliance, especially from the wholesale and retail sectors.
The sectors accounted for between 55 and 60 percent of VAT. The minister said some operators had devised ways to evade paying tax, not filing their tax returns and deliberately under declaring.
“There are also taxpayers who make arrangements for the settlement of their debts, only to end up dishonouring them. Another factor that contributed to poor VAT performance was a decline in the contribution of the construction, water and sewerage, as well as electricity sectors.”
He said the alcohol and tobacco levy failed to get off the ground due to the failure by the government of Lesotho to enact an alcohol and tobacco law to operationalise it.
“With regards to the Alcohol and Tobacco levy, there was no collection at all due to the delay in enacting the bill required to enable the collection. This was after concerns were raised about the impact this bill would have on the prices of these commodities.”
The bill, Mr Sekhamane said, was given to the World Bank to undertake research on its implications on the economy.
“There was an agreement for the World Bank to undertake appropriate research to ensure that the bill would not have undesired knock-on effects on the companies that produce these commodities and on the economy as a whole.”
He also appealed to Basotho yet to fulfil their tax obligations to do so promptly.
“I would like to thank all those who have paid their fair share of taxes; and to appeal to those of us who are lagging behind, to please do the right thing and come up to date with regard to your tax obligations. “Please come forth and comply. It is the least we can do for our country.”
Mr Sekhamane said the LRA deserved commendation despite failing to meet the set target.
“Admittedly, performance has not been so good this year, seeing that we have missed our target. However, I still want to commend the LRA family for doing a sterling job over the years.
“Your track record speaks for itself. I will encourage you not to despair but rather, in the words of Lady Macbeth, in William Shakespeare, screw your courage to the sticking place, and we shall not fail again.”
He added: “Bear in mind, always, in everything that you do, that the survival of our entire population, the whole gamut of them, especially the poor and the peripheral sectors of our populace, depends entirely on the work that you do.”
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