….as informal traders vehemently oppose new tax regime
Informal traders say presumptive taxes do nothing for transformation and instead further plunges the poor and marginalised into dire straits.
Those operating in the informal sector will most certainly not be taking kindly to the introduction of presumptive tax, with many expected to shy away from the voluntary registration process.
The introduction of the tax which will hit the informal economic sector the hardest is seen by Treasury as a move to catch more income earners in the country’s tax net after government struggled to meet its revenue targets over the years.
“Why should we pay tax to only feed a few people? The government has used up all the money and is now trying to get every penny from its’ poorest of citizens to feed bloated the government.
Why should we pay tax to a government that does not support small businesses?”
These are some of the sentiments on the streets of Windhoek from small business owners in response to proposed tax brackets covering those at the very end of the business chain.
This week, the informal business community did not hold back their frustration towards the proposed presumptive tax expected from hair salons, taxi and bus drivers, hawkers, plumbing services and the men selling kapana.
The pamphlet with the stipulated proposal which went viral on social media circles and made rounds on the streets proposes that anyone conducting any business in the country, both in formal and informal set up, should know that the income they make is subject to tax.
It is however expected that the authors do not share the same sentiments with tax commissioner Justus Mwafongwe who is adamant that the tax will come into effect despite the backlash.
“It is a standing law and everyone should be captured in the tax net. We have tax brackets and this is nothing new.
No one should be left out or discriminated when it comes to paying tax,” said the tax commissioner.
Despite the opposition, those expected to pay presumptive taxes say the decision is devoid of logic considering the current economic troubles in the country.
“We don’t welcome this proposal. Some of us don’t have enough already and we are expected to contribute to government.
The other day we asked for a taxi fare increase of N$5 and it was seen as an issue – it was put on hold. A week later, fuel prices increase by N$0.60 cents a liter. So where will we get money to pay tax again when everything is against us?’ queried a frustrated John Mungandjela, a taxi driver.
The Commissioner this week said “it is misplaced awareness that those in the informal sector are not obliged to pay tax.”
He added that, in fact, there are those in the informal set up who make more money than those in the formal set up, using a barber as an example.
“If you have a guy who cuts hair in town – this person charges N$50 per person and is likely to get 10 or more customers in a day. Multiply that by the number of working days, this person earns more than those in the formal employment sector. There are people who are earning close to N$50 000 per month so why should they not pay tax,” said Mwafongwe.
All businesses that make annual taxable supplies of more than N$500 000 should apply for Value Added Tax registration. This, Mwafongwe says may exempt the women on the streets who do not make the threshold.
“We cannot allow the tax base to be eroded because people who think that when they operate in the informal sector, they should not pay. We must understand that these are business people in their own right, the only difference is that they are small,” he said.
More hostility came from the kapana vendors who feel the economic downfall has dented their business. Jesaya Pawa says they ought to be consulted before the decision was penned down.
“We don’t have money. We have never kept books nor do we have the accounting experience to keep records. The little we get is just enough to support our families and make sure you eat for the next day. It is a bad idea,” he said.
According to Mwafongwe, the program is currently in a voluntary face and they expect business operators to register their businesses for tax by self-will. The department is aware that the process will not invite many businesses but also sends out a stern warning to those who will not be complying. The commissioner made it clear that the department will further develop mechanisms that will eventually compel those in business to comply while those who default will face the wrath.
The ministry’s inability to effectively regulate and collect taxes has been exposed over the years, with the Chinese businesses and locals evading tax at will.
“We know that government is broke and they will introduce anything to get more money from us only to squander.
It would have been a different thing if the people who pay tax actually get to see the benefits. But it is not so. Instead of going for us, why do they not instead follow up with the thousands of Chinese businesses here who we all know don’t pay tax? We feel the government is really targeting us,” said Emvula Shilongo, an urban poultry farmer.
Mwafongwe however claimed that locals should not feel targeted as the exercise is aimed at affecting both citizen and residents in the country.
“When it comes to administering the tax system, you cannot discriminate. The tax laws must be applied equally and everyone must pay,” said Mwafongwe adding that the practice will help small businesses grow.
“Nobody should be left out in terms of paying their taxes. Of course we need money. We believe that if these colleagues operating in the informal sector do pay their taxes, we will get money and we will be happy. This is the same money that we will be ploughing back to the economy,” he further said.