Harare – The COVID 19 pandemic negatively impacted tax revenues of most SADC member states in 2020 as business activity and demand for goods and services fell, prompting governments to institute urgent measures to get back on an even keel.
The tax revenue reduction affected national budgets and debt servicing.
This has seen country’s like Botswana instituting measures to offset losses, including an increase in value added tax from 12 percent to 14 percent effective April 1, 2021; and an increase in dividend withholding tax from 7.5 percent to 10 percent effective July 1, 2021. The government also offered an amnesty for the 2021-2022 tax year to encourage taxpayers to settle outstanding dues in return for a waiver of interest and penalties.
The country has increased the zero-rate threshold for individual taxpayers by 33 percent, and set the fuel levy at approximately US$0.09 per litre effective April 1, 2021.
Namibia experienced a deep contraction of 7.3 percent in 2020, and revenue is expected to remain low in 2021/22 owing to continued depressed economic activity.
The 2021 Namibian Budget Statement estimates a tax revenue decline of about 6.1 percent in 2021/22 relative to the previous financial year. The expected decline is mainly induced by a reduction in SACU receipts and company taxes.
The tax slump was keenly felt in South Africa, where the revenue authority collected US$85 billion in the financial year ended March 2021, around 12 percent less than the government’s original target.
The South African Revenue Service said in its preliminary revenue results, “The extra out-of-ordinary pandemic circumstances changed the economic landscape and the way SARS operates to collect the tax revenue due. The main drivers of the reported revenue are the impact of renewed tax administrative efforts to improve taxpayer compliance, domestic and global constraints on economic activities and the related tax relief measures implemented in lieu of the COVID-19 pandemic restrictions.”
During the first half of 2020, total revenue collections and grants in Zambia were 5.1 percent below projections.
In 2021 the Zambian government proposed to offer both tax and non–tax relief, resulting in reduction in tax and non-tax revenues by 0.9 percent and by 28.2 percent respectively. Comparatively, the government increased tax and non–tax revenue sources by 14.5 percent, 93.9 percent and by 14.1 percent and 14.9 percent in 2020 and in 2019 respectively.
Mr Tatenda Nyachega, an economic analyst, said: “SADC governments still need to explore more revenue options and innovative solutions to encourage tax payments since revenue is crucial for development and the current state most countries are in now. Taxation is an area that needs to be carefully relooked into especially with regards to strongly enforcing the elimination of revenue leakages through corruption as every cent counts for Africa.”