The Ministry of Finance and Public Enterprises maintains Namibians are not overtaxed as it may seem, because if that were the case, the Treasury could have been recording a budget surplus.
“You must see taxation as the one hand of the national budget versus the expenditure side. If we were running a surplus year in, year out, you could argue you are being overtaxed, that the government was pulling way too much out of the economy,” Ministry of Finance and Public Enterprises’ Deputy Executive Director Oscar Capelao said.
He said when compared to other countries, Namibia has a competitive tax regime.
“However, as much as you want to argue that you are being overtaxed, the government is still not balancing the budget, for instance, when international players like the International Monetary Fund or SADC would look into this case, they would even say Namibia is taxing way too little.
However, on our end when I look at competitiveness, we are taxing enough. So, the argument of overtaxation needs to be looked at from a balanced budget standpoint,” the Deputy Executive Director said.
Namibia has various taxation systems such as the corporation tax, personal income tax, withholding tax, additional sales levy, transfer duty tax, stamp duty, customs duty and municipal rates, as well as value-added tax.
Furthermore, Capelao said it is hard to reduce rates when you are sitting with a deficit because obviously, “if I were to reduce the top line, then the deficit would just grow, which means we need to borrow more, which will eventually see interest payments going up, which means in future we will have to raise taxes to pay back the debt. So, are we overtaxed?”
The former Chief Financial Officer thus underscored the importance of having a policy unit, which will advise the Minister of Finance constantly while bringing these issues up and including the voice of the average person.
“As such, we look at the average tax rates on whether it is what the economy can afford. But obviously you and I must keep in mind on the other hand, because I’m dealing with revenue, then there are those who come and put in spending needs and the two of us must just keep each other in mind because what we do not pay in taxes must be borrowed. What is borrowed needs to be paid back in future. How do you pay back in future? It will again come back to taxation.” he noted.
“So, the tax you don’t pay today, you will have to pay tomorrow, for the country to pay back. So are we overtaxed in terms of the tools that we are using? We are using exactly the same tools as the rest of the world, and we’ve tried to keep our rates stable for a very long time. So we are sensitive of how much we can tax, cause if we pull way more out of your pocket, it will slow down the economy.”
