…loses 17 vehicles to RSL over unpaid tax
Mathatisi Sebusi
CARELESSNESS, a ballooning wage bill, and poor revenue collections have plunged the Maseru City Council (MCC) into a staggering M67 million tax debt.
The debt includes about M13 million in Pay As You Earn (PAYE) arrears and accumulated penalties for failure to file and pay the Revenue Services Lesotho (RSL) on time.
Speaking at a press conference held on Friday at the MCC offices, Maseru Town Clerk, ‘Moea Makhakhe, said the debt dates back to 2015 when MCC began defaulting on its PAYE payments. The crisis culminated on 31 October 2025 when RSL officials confiscated 17 council vehicles.
“In May 2015, MCC started defaulting in remitting PAYE to RSL until May 2025. In May 2021, the government intervened and bailed MCC out with M37 million, reducing the debt to M15 million. However, the debt started accumulating again in 2021,” Mr Makhakhe said.
He said the failure to remit PAYE on time resulted in penalties for both “failure to pay” and “failure to file”, which compounded the debt.
“These penalties caused the debt to balloon until we received a final statement in May this year, showing that our total liability had reached M67 million.”
Mr Makhakhe said the council had been in negotiations with RSL to manage the debt.
“Last year, we paid M12 million towards the arrears in an effort to address the situation. In January this year, we also agreed with RSL that clients paying revenue to MCC should remit it directly to RSL to reduce the outstanding debt.”
However, despite these efforts, RSL warned that the debt was spiralling out of control.
“We requested a council resolution to develop payment strategies or, failing that, to seek government intervention. After thorough reconciliation, we discovered that the actual principal debt is M13 million, with the rest being penalties.”
He said that while MCC was still strategising on repayment, RSL served the council with a distress notice on Friday morning, leading to the seizure of 17 vehicles — 14 small cars and three lorries.
MCC said it has since reported the matter to Prime Minister Sam Matekane and the Ministry of Chieftainship, Local Government, Home Affairs, and Police’s Principal Secretary, ‘Mamphaka Mabesa, who has written to the Ministry of Finance and Development Planning requesting government assistance to pay the debt, excluding penalties.
“The Ministry of Finance’s Principal Secretary responded by demanding details, including the total amount owed, reasons for non-payment, duration of the arrears, and our proposed recovery strategies before considering our plea,” Mr Makhakhe said.
The government also requested a detailed report outlining what needs to be done to restore MCC services, as well as the council’s latest audited financial statements, current cash flow and debt obligations, and recovery plans.
Mr Makhakhe attributed the situation to long-standing financial difficulties caused by low revenue collections and an unsustainable wage bill. He also revealed that MCC incurred an unnecessary M931,000 debt due to staff negligence in filing revenue collections.
He said MCC is required to remit M525,000 in PAYE to RSL monthly, in addition to paying salaries and rent — all of which have drained the council’s finances.
“Our wage bill is overwhelming. We spend about M4 million monthly on salaries, and most of our staff are warm bodies with no specialised skills. We also pay M600,000 in rent every month — all from our annual revenue collection of only M56 million,” he explained.
He added that the council was restructuring to identify areas where staff could be redeployed to improve efficiency.
“At present, MCC urgently needs to pay M13 million before we can enter any negotiations with RSL over the penalties,” Mr Makhakhe said.
When asked by the Sunday Express how the nonpayment of the debt would affect staff retirement packages, Mr Makhakhe replied:
“RSL will have to seize more of our property because the vehicles they took do not even amount to M8 million. However, we hope to pay before the situation escalates further.”
Mr Makhakhe emphasised that MCC survives solely on internally collected revenue and receives no government subvention.
“Government entities also owe revenue but are currently not paying, though they provide us with grants. MCC’s revenue sources include house rates, waste collection, road construction, leisure park development, graveyard allocation, and street lighting, among others,” he said.