Government has set its sights on potential dividends of at least N$2.5 billion from its high performing entities – cash cows – as it looks forward to positive revenue to fund the 2023-2024 national budget which was tabled last week and is in excess of N$84 billion, Business Express understands.
In essence Government expects dividends of N$600 million from the Namibia Post and Telecom Holdings Company (NPTH), N$300 million from the Namibia Desert Diamonds (NamDia), N$400 million from the Bank of Namibia and over N$1.2 billion from the NamDeb Group in the coming financial year.
Finance and Public Enterprise Minister, Iipumbu Shiimi affirmed this last week, further revealing that expected dividends from the diamond sector have been revised down significantly relative to expectations during the FY2022/23 Mid-Year Budget Review in line with recent global demand and price developments.
In his 2023/24 budget speech, Shiimi expressed that on the revenue front, total collections of N$74.7 billion are estimated, about 16.5 percent higher than the revised estimates for FY2022/23.
“The significant boost to revenues stem from an upward revision in receipts from the SACU customs pool to N$24.3 billion, around N$6.4 billion higher than our previous estimates. Furthermore, on the domestic front, recovery in economic activities supported by gains from improved tax compliance in line with tax administration reforms resulted in upward revisions of expected collections on VAT and personal income tax,” Shiimi said.
Shiimi also highlighted that over the MTEF period, revenue growth is projected to average 7.7 percent reaching N$79.8 billion by FY2025/26.
“In the outer years, the projections are anchored on gradual increases based on anticipated positive growth in nominal GDP augmented by steady SACU inflows as regional trade normalises. Furthermore, in FY2024/25, the forecasts also accounted for expected receipts from the 9 percent undisposed MTC shares. We hope this timeline gives NPTH a sufficient window to finalise the disposal transaction,” he said adding that as a proportion of GDP, revenue is expected to average 34.0 percent over the MTEF, fairly above the long-term average.
“Although we have maintained an element of conservatism in our forecasts, there are still downside risks 10 given uncertainties in the global and domestic economy. Nonetheless, we remain committed to maintaining fiscal sustainability and will thus approach any unanticipated shortfalls in a manner that preserves the gains on our fiscal metrics thus far.”
He went on to say that he was tabling the budget against the backdrop of the current conjuncture of a moderately improved growth outlook but amidst a still elevated public debt profile and increased financing needs to boost social safety nets and meet the prevailing social and economic climate in the country.
“On that note, maintaining a careful balancing act in pursuit of a people-centred but sustainable budgetary framework was the organising principle around the preparation of this budget,” he said.
Tax reforms
In the area of tax policy and tax administration reforms during the MTEF, Shiimi said focus will be placed on the implementation of measures to provide some relief to taxpayers in the near to medium term.
Essentially, the non-mining company tax rate will be reduced by two percentage points over the two outer years of the MTEF. Accordingly, the tax rate will be reduced to 31 percent effective on 01 April 2024, with a further reduction to 30 percent on 01 April 2025.
Shiimi also noted that as communicated during the FY2022/23 Mid-Year Budget Review, the Ministry has undertaken an assessment of the consideration to provide tax relief to low-income earners.
“In this regard, we have resolved to introduce tax relief for individuals in the N$50,000 to N$100,000 tax bracket, effectively reducing their tax rate to zero effective in FY2024/25. The implementation modalities of the envisaged tax relief will be outlined in due course and NamRA will continue with the final instalment of the tax arrears relief program, whereby interest and penalties will be fully written off if outstanding capital is fully settled by 30 October 2024. This is the final extension of this program, and we urge all concerned taxpayers to participate before the due date. Afterwards, there will be no more mercy,” he said.