Coen Welsh | Aug 9, 2017 | 0
SACU our saviour
SACU transfers account for an estimated 40% of the current total tax revenue. This dependence has ushered much debate. Has the SACU revenue formula changed or are we simply finally reaping the benefits from the 2002 addenda? Further observation has shown that for the 2012/2013 fiscal year, SACU transfers represents an estimate of 13% of total GDP. This observation has pushed certain analysts to note the weight in which Namibia economy is hinged on the transfers. Further speculating that the agreement still benefits the South African industries as manufacturing entities.
The common pool of resources is drawn from customs, excise and a development components as defined in the formula. Namibia benefits now with a robust mining industry and the fact that its trading activity as a percentage of GDP is relatively high. “The attachment Namibia has on regional economies specifically South Africa raises eye brows as the South African economy seems to be crippling” stated the analyst. Further examination of the current trend seems to be providing the government with reason to gain comfort with debt finance and running budget deficit but this may translate to future tax increases. The analyst further added that it would be wise for government to err on the side of caution when making future predictions concerning the SACU revenue and its implications in society. “government will be better off by focussing on developing the local investment environment.”
In an interview with the Economist Mr Bevan Simataa, Director of customs and excise at the Ministry of Finance retaliated saying that firstly “The SACU Secretariat has been instrumental and key in cleaning up data and mediating discussions between member states in relation to inter and intra trade activities.” Concerning the formula “The debate is still on-going concerning the SACU formula and whether it will be changed or it will stay the same.” He further explains that since 2002 despite the fluctuations in SACU receipts to Namibia the underlying formula has not changed. The relative increases can be explained with instances where Budget in a particular year is understated with growth predictions seemingly meagre. At year end though performance form certain industries may have been better than expected this provides a spill over effect to the next year with receipts received being much higher than those of previous year. “The SACU formula and documentation are readily available and all can access the information”. He further explains though that the documents detailing the nitty-gritty of yearly revisions and discussions that affect a countries’ final receipt from the pool are sensitive and are often misunderstood by general public. He further emphasize that there are other policies that government has set in place to boost its revenues and ameliorate international trade. The export processing zone, value addition for all trade-able goods and environmental tax policies. He further emphasized that (IIP) infant industry protection policy allows provision for certain industries like poultry farming , which has shown success, dairy milk products and cement industry are to benefit in their operations.