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LRA hit bull’s eye


Ntsoaki Motaung

The Lesotho Revenue Authority (LRA) has once again hit the bull’s eye stretching its good performance for the past two financial years despite the challenges brought by the Covid-19 pandemic.

The authority has proven its prowess going above par and surpassing its 2021/2022 financial year target of M6.6 billion by M638million above target which is 9.6% setting their new record to M7.3billion.

This was disclosed by the Commissioner General of LRA Thabo Khasipe during his presentation on Wednesday.

Khasipe explained that most of the collections were in Value Added Tax (VAT) with M3.8billion which makes 52.8% whereas 42% was in Income tax.

“For income tax, Public Administration and Defence, Compulsory and Social Security contributed 22% and it is the highest category of income tax and that is the income from the Government, followed by the Financial and Insurance activities with 18.8%. Then the Mining sectors comes in a bit distant at third place with 15% to income tax contribution,” he said.

He said types of income tax like Pay As You Earn (PAYE) contributed 62.6% of income tax came from employees while Corporate Income Tax (CIT) contributed 22%.  

“What makes the most contribution to the pay as you earn once again is the government at 33.63%. So civil servants contributed the most followed by once again by the financial and insurance sector and at third is Human health and social activities, with mining sector coming forth,” he said.

He said the new mark of M8.6billion set for the 2022/2023 financial year is a big challenge but attainable if the Ministry of Finance can amend some laws to close tax evasions to simplify their collections.

“It is going to be a challenge but be that as it may, there are laws that it has been LRA’s plea with the Ministry to have them amended. LRA’s purpose about those laws is to simplify tax collection as well as loopholes that may have arisen. It is expected that those changes will bring more revenue and that is why we belief it is possible that LRA can try and meet and indeed exceed the target of M8.6billion,” he said.

The Minister of Finance Thabo Sophonea indicated that, the revenue collection outcome comes at the backdrop of a strained economy which is still trying to recover from the scourge of Covid-19, which had a negative socio-economic impact.

“I did mention in the budget speech that economic growth for 2022/23 is projected to remain buoyant at 2.3% before expanding to 2.5% in 2023/24 and averaging 2.8% over the medium – term,” he said.

He said the LRA’s combined annual revenue target for the 2021/2022 financial year, was M6 643.99billion, which indicates a growth of 18.5% from the previous financial year target.

“The revenue collection projections that were made in the fourth quarter reflected a possible tax collection surplus. As you have noticed, the National Annual Budget proposal that was made to Parliament in mid-March this year, which has now been approved, took these projections into consideration,” he said.

Sophonea explained that LRA cannot be successful in its work without the cooperation of the tax paying community.

“The moral obligation of paying taxes stems from the virtue of commutative justice which is the presumed social contract between the state and the citizens. It is therefore important to adhere to the principles of fair tax system which amongst others includes transparency, equity, simplicity, and efficiency. Alongside their mandate of revenue collection LRA remains committed to the practice of these principles,” he said.

He said it is through taxes that the government is able to pay old age pensions, build schools and hospitals, pay salaries of civil servants, provide clean potable water, provide electricity, build roads and a myriad of other public services.

“This financial year, 2022/2023, a combined revenue target that LRA has been directed to collect is over M8billion. I have no doubt in my mind that this target is achievable given the track record and the strategies that have been developed and employed,” he said.

The minister said he beseeched the Parliament to prioritise legal frameworks that will enable LRA to discharge its mandate effectively and efficiently “…the legal instruments that I am referring to include: Value Added Tax (VAT) (Amendment) Bill, Tobacco and Alcoholic Products Levy Bill, Income Tax (Amendment) Bill, Lesotho Revenue Authority (Amendment) Bill and Tax Administration Bill,” he mentioned.

On behalf of the LRA board, the Chairman Robert Likhang said this growth in revenue collection was achieved notwithstanding the challenges brought by the Covid-19 pandemic on the global economy.

He said despite the adverse impact of the pandemic on the economy, LRA has continued to mobilise revenue sustaining a positive trajectory.

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