SACU rev­enue shrinks fur­ther

. . . as govt ex­plores al­ter­na­tive sources of in­come

Lesotho Times - - Business - Bereng Mpaki

SOUTH African Cus­toms Union (SACU) rev­enues to the fis­cus are set to de­cline from 23 per­cent to 17 per­cent of gross do­mes­tic prod­uct (GDP) in the 2016/17 fi­nan­cial year.

This was dis­closed by Fi­nance Min­is­ter Dr ‘Mam­phono Khaketla dur­ing her na­tional bud­get pre­sen­ta­tion last Fri­day in the Na­tional As­sem­bly.

She said the to­tal rev­enue tar­get for the 2015/16 fi­nan­cial year was M14.405.7 mil­lion, of which SACU recorded M6 398.2 mil­lion.

How­ever, in the 2016/17 bud­get, Dr ‘Khaketla pro­jected a to­tal rev­enue of M15.473.8 mil­lion, of which SACU re­ceipts ac­counted for M4.593.8 mil­lion.

“Rev­enue per­for­mance re­mains vul­ner­a­ble to ex­ter­nal shocks, largely due to the coun­try’s de­pen­dence on SACU re­ceipts, which con­sti­tute 32 per­cent of govern­ment’s rev­enue,” she said.

“The de­te­ri­o­ra­tion in the coun­try’s share of SACU re­ceipts is as a re­sult of a com­bi­na­tion of lower than pro­jected per­for­mance in 2014/15, which will re­sult in a neg­a­tive ad­just­ment of about M1.075 mil­lion in 2016/17, and a pro­jected de­cline in eco­nomic per­for­mance in the cus­toms union in 2016/17.”

The min­is­ter also said real GDP growth slowed down to 3.7 per­cent in 2014/15 fol­low­ing a growth of 4.2 per­cent in 2013/14. “The slow­down in eco­nomic per­for­mance could be at­trib­uted to cor­ro­sion in sec­ondary in­dus­tries en­su­ing from a de­cline in the man­u­fac­tur­ing sec­tor (down by 10.9 per­cent) and con­struc­tion (down by 10 per­cent),” said Dr ‘Khaketla.

“In ad­di­tion, ter­tiary in­dus­tries reg­is­tered a low growth in 2014/15 af­fected by a slow­down in fi­nan­cial in­ter­me­di­a­tion and health ser­vices. The pri­mary in­dus­tries on the other hand, recorded a higher growth of 9.7 per­cent from 4.2 per­cent in 2013/14 at­trib­uted to a ma­jor growth of 15.5 per­cent in the min­ing and quar­ry­ing in­dus­tries.”

She said the govern­ment would look to other rev­enue sources to mit­i­gate the ef­fects of the re­duc­tion of SACU in­flows.

“Macro-fis­cal sta­bil­ity con­tin­ues to be at the cen­tre of govern­ment’s de­vel­op­ment agenda. Fur­ther­more, the Coali­tion Agree­ment signed at the on­set of the cur­rent govern­ment con­tin­ues to bear rel­e­vance in at­tain­ing this sta­bil­ity,” said the min­is­ter.

“Our ac­tions as a na­tion should be geared to­wards achiev­ing faster eco­nomic growth through in­sti­tu­tional re­forms, ef­fec­tive use of our nat­u­ral re­sources, in­fra­struc­ture de­vel­op­ment, and for­eign and do­mes­tic pri­vate sec­tor in­vest­ment.”

Dr Khaketla said the govern­ment would im­ple­ment a raft of in­ter­ven­tions to boost its non-tax rev­enue col­lec­tion.

“Al­though tax rev­enue is pro­jected to con­tinue to grow in the medium-term, the growth is not suf­fi­cient to off­set the de­clines in SACU rev­enue,” she said.

“This con­se­quently poses a threat to macro-fis­cal sta­bil­ity and debt sus­tain­abil­ity, and govern­ment’s abil­ity to pro­vide a con­sis­tent and pre­dictable sup­port to growth.

“The chang­ing global eco­nomic en­vi­ron­ment there­fore calls for in­ten­si­fied ef­forts to pro­mote do­mes­tic rev­enue mo­bil­i­sa­tion — both tax and non-tax rev­enue.”

To mo­bilise do­mes­tic rev­enue, Dr Khaketla said the LRA had been re­struc­tured to im­prove its ad­min­is­tra­tive ca­pac­ity and client fo­cus.

Other in­ter­ven­tions in­clude: l The Min­istry of Pub­lic Works and Trans­port will in­tro­duce per­son­alised num­ber plates, which will cost more than or­di­nary num­ber plates; l The Min­istry of Pub­lic Works and Trans­port will re­vise the cost of reg­is­ter­ing ve­hi­cles, ob­tain­ing driv­ers’ li­cences, and other pay­ments made in the min­istry; l All min­istries have been asked to re­view the var­i­ous fees and fines by at least the in­fla­tion rate, and rates should be au­to­mat­i­cally in­creased an­nu­ally by the in­fla­tion rate to mit­i­gate huge in­creases.

This will be gazetted through reg­u­la­tions by each min­istry. Th­ese re­vised fees will be pub­lished dur­ing the first quar­ter of the 2016/17 fi­nan­cial year; l The oil levy will be in­creased by 2 cents; l The govern­ment will also ex­plore modal­i­ties of in­creas­ing the bor­der toll fee to dif­fer­en­ti­ate fees paid by lo­cal and for­eign reg­is­tered ve­hi­cles.

The min­is­ter said pri­vate sec­tor growth was also on the govern­ment’s pri­or­ity list.

“An­other way of pro­vid­ing im­pe­tus to do­mes­tic rev­enue is to pro­vide a con­ducive plat­form for the pri­vate sec­tor to thrive,” she said.

“As a start­ing point, govern­ment has de­cided that the con­struc­tion in­dus­try has to be re­vi­talised.

“To this end, govern­ment will ear­mark some of its sites on prime land in Maseru, to be­gin with, which will be made avail­able to the pri­vate sec­tor to de­velop on be­half of govern­ment.

“An­other pro­posed method of gen­er­at­ing rev­enue with­out re­sort­ing to bor­row­ing, will be to ring-fence a por­tion of the roy­al­ties that govern­ment re­ceives from the min­ing and/ or wa­ter sec­tors, and use th­ese to raise fund­ing that can be used ex­clu­sively for cap­i­tal projects. “

This again will re­duce the bur­den of debt whilst cre­at­ing jobs for the pri­vate sec­tor.”

Min­is­ter of Fi­nance Dr Mam­phono Khaketla

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