Focuses on Revenue Collection Optimization
The Ministry of Finance has announced that there will be no immediate tax increases, as the government undertakes a comprehensive review of all tax laws. This decision was disclosed by ministry representatives during the University of Botswana (UB) budget review seminar. They emphasised that the ongoing review process will inform future policy direction. Instead of raising taxes, the ministry is currently focusing on enhancing tax collections where there is potential for improvement.
The ministry’s stance reflects a cautious approach during a year of election fever. They believe that even if taxes were increased without addressing existing loopholes in tax collection, revenue leakage might persist at the same rate. During her budget speech, Finance Minister Peggy Serame highlighted efforts to enhance revenue collection efficiency. One such initiative is the implementation of Electronic Invoicing (E-Billing) by the Botswana Unified Revenue Service, aimed at optimizing VAT collection. The first phase of this three-year project is scheduled for completion by December 2024.
Given this context, the ministry advocates for prioritising the identification and rectification of areas of under-collection before considering tax hikes. For the fiscal year 2024/2025, the government has set ambitious targets for non-mineral income tax and VAT revenues, amounting to P22.0 billion (23.5%) and P15.24 billion (16.28%) of total revenues and grants, respectively.
Economists, including Dr. Keith Jefferis of Econsult and tax expert Jonathan Hore, acknowledge the challenges but express confidence in the achievability of these targets. Hore suggests that with enhanced tax collection strategies and skilled personnel, the Botswana Unified Revenue Service (BURS) can leverage untapped revenue sources effectively.
Minister Serame underscored the government’s commitment to maximising revenue through various policy and administrative measures. These include diversifying the revenue base and improving operational efficiencies. On the tax administration front, ongoing reforms involve incorporating digital sales of products and services by remote suppliers into the tax framework.
Serame also revealed plans for BURS to implement a digital solution for marking and tracking excisable goods, with full implementation expected by July 2024. Additionally, BURS continues to enhance the efficiency of its e-services, such as online tax filing systems and electronic payment platforms, to streamline tax compliance for individuals and businesses, thereby promoting a conducive environment for investment, said Serame.
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