MASERU – Lesotho Revenue Authority (LRA) wants government to expand its mandate from collection of just tax revenue but to also include non-tax revenue to increase domestic proceeds.
Non tax revenue is government revenue not generated from taxes. The undertaking which is currently a trend across the globe is seen as a way to go, particularly considering the continuous decline in Southern African Customs Union (SACU) revenues in recent years. SACU revenues have been on a downward performance, and projections are that the downward trajectory will continue.
This was revealed on Wednesday where the revenue authority announced outcome of revenue collection for the 2020/21 financial year. The event also marked the launch of a 2020/21 financial year filing season.
Despite the challenges presented by COVID-19 pandemic, the Lesotho Revenue Authority (LRA) has managed to register a revenue collection of M6.350 billion, registering a 13 percent surplus into the fiscus. The 13 percent surplus means the revenue authority exceeded the target by M745 million.
The revenue authority was given the mandate to collect M5.605 revised from the initial target of M7.591 billion, 35 percent reduction due to the pandemic. The effects of COVID-19 which were characterized by several economic disruptions led to the revision.
“SACU revenues are declining and this year there is going to be a huge deep in collection. But since we have zero control over SACU, it is better for us to make sure that our fate is in our own hands and control the revenue that is in the country,” the LRA Commissioner General, Thabo Khasipe, said on Wednesday.
A platform to collect non tax revenue will further increase cost efficiency while the country will no longer desperately depends on the revenue collected from SACU going forward.
The chairman of the LRA board, Robert Likhang, reveled in a separate interview with Public Eye that with the coronavirus pandemic, it is clearly going to be even more difficult to collect going forward.
“Certainly SACU revenues make quite a substantial amount of revenue of this nation and changes will certainly affect the fiscus. However, given that, it shows that we have to work even harder and make sure that we improve domestic revenues as much as possible,”
“There is a need for cost efficiency to make sure that the cost of collecting the money is less. Many tax authorities around the world have extended beyond merely just collecting tax on behalf of government but have also collected the non-tax revenue using the expertise that they have built while collecting tax to ensure that they pass all these efficiencies and effectiveness,” Likhang elaborated.
Since 2019, there has been some doubt as to whether the LRA can be able and have enough capacity to collect both tax and the non-tax revenues.
The chairman yesterday told Business Eye that the authority is well capacitated to collect both revenues. Since establishment, Likhang said, the revenue authority has outsmarted government in collecting tax.
Before the existence of LRA, government departments were mandated to collect tax. And, comparably, the collections are higher now than they used to be under the guidance of government.
“We have been able to build efficiency and we have been able to collect more. So we are saying, we should be allowed to go further and collect other revenues.”
“If you can collect tax, it means you can collect every other revenue. And if we outsmarted government in tax collection, it means we would outsmart government departments in collecting the non-tax revenue. We have systems in place to achieve that goal,” Likhang further showed.
In 2020/21 financial year, both income tax and VAT exceeded their respective targets by the highest margins over the five-year period. Income tax registered a 14 percent increase while VAT recorded a 12 percent increase.
Income Tax, at M3.274 billion targeted for the year was exceeded by 14 percent, remitting M3.743 billion while VAT with a target of M2.331 billion targeted, remitted M2.608 billion.