Tuesday 11 May 2021
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Public wage bill hits N$25 billion

The public wage will hit the N$25 billion mark during the 2016/17 financial year, a figure seen as relatively high for Namibia, but government says “there are good reasons for it”.
Civil service reforms are on the cards to control government spending, especially now that the public wage bill has increased.
“There are good reasons for the wage bill. However, for stability and sustainability purposes, the time has arrived to look into the matter of containing the wage bill, without compromising on service delivery,” according to the Harambee Prosperity Plan unveiled on Tuesday in the National Assembly by President Hage Geingob when he delivered his State of the Nation Address.
Another control measure that will be adopted is expenditure prioritization.
“Government will continue efforts to better prioritize expenditure. Priority will be given to expenditure items that will generate economic growth and employment,” outlined the Plan.
The Ministry of Finance and the National Planning Commission will also jointly undertake a study on expenditure efficiency that will feed into the next mid-term review of the budget later this year.
Efforts will also continue to broaden the tax base reveals the Plan.
“Efforts at broadening the tax base will be pursued throughout the Harambee period. Some measures include the introduction of a presumptive tax, and the taxation of gambling activities.”
The much-criticised solidarity wealth tax will also be introduced to narrow the inequality gap in the country.
“Namibia remains one of the most unequal societies in the world with a very high GINI Coefficient. Government will investigate modalities for the introduction of a Solidarity Wealth Tax, as a wealth redistribution instrument.”
Geingob said on Tuesday that the revenue derived from this tax will be ring-fenced for developmental programmes.
The Solidarity Wealth Tax will be taxed on individuals and corporates earning in excess of a certain threshold to be determined in year one of Harambee. The Tax will have a sunset clause of 2030.
Geingob said a task team, which includes independent tax experts, has been established under the leadership of the Minister of Finance to draft a White Paper on the modalities of the Solidarity Wealth Tax for public consultation.
“None of us can be proud of the high GINI coefficient in Namibia which implies a significant gap between the rich and the poor. Wealth disparities have reduced since independence but not at the required pace,” said Geingob.
“While the payment threshold for solidarity wealth tax will be finalized after consultations, it is important to clarify that the Solidarity Wealth Tax will only be applicable the wealthy in high income brackets. For the sake of clarity, it will definitely not be N$78,000 per annum,” said Geingob.
This tax measure will have a sunset clause and is thus not indefinite, he said.
The current administration has set itself a target of anchoring the public debt to 30 percent as a ration of GDP by the end of the Harambee period.
The plan, which was unveiled by President Hage Geingob on Tuesday, also outlines plans to develop SME Development Agencies all across the countries.
In terms of competitiveness, government wants Namibia to be rated as the most competitive economy in by 2020 as measured by the World Economic Forum and World Bank.
“We can also not afford to entertain self-inflicted crises so that when real external crisis strike as was the case in 2009, we do not have the ammunition to embark on counter cyclical policies,” states the plan.
According to the plan: “To safeguard macro-economic stability and preserve our international rating, Government has started a process of fiscal consolidation.”
In order to maintain macro- economic stability during the Harambee period, government will focus on strict control measures because it spends significantly on the procurement of materials and supplies.
“Despite being the dominant procurer, Government does not benefit from these economies of scale, in the form of discounts. To the contrary, often prices get inflated because it is Government that procures. This will stop under Harambee.”

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