The Lesotho Revenue Authority (LRA) surpassed its revenue collection target by recording M745 million positive out performance of the target which is 13% above the target.
Minister of Finance Thabo Sophonea said the Ministry of Finance has a paramount role of ensuring that Lesotho is able to mobilize its own revenue sources to finance and support Governmentâ€™s developmental initiatives and its other social responsibilities. The Ministry carries out this role through the Lesotho Revenue Authority.
He said dealing with the challenge of Covid-19, the 2020/2021 financial year was the most difficult year any Minister of Finance could face.
â€œAt the very onset, we started on the wrong foot. Economic activities were significantly constrained due to COVID – 19, while on one hand, the need for funds to fight this pandemic were at an all-time high. This required an intricate balancing act of maximizing revenue collection while also supporting both our businesses and citizens during these trying times,â€ he said.
â€œTo this end, in April 2020 the Government of Lesotho introduced many relief measures to mitigate the impact of COVID â€“ 19. As far as LRA is concerned, a few tax relief measures were introduced. These relief measures were largely underpinned by deferment; meaning that payments of Company Income Tax, Individual Income Tax, Pay As You Earn, Value Added Tax and the Simplified Business Tax (SBT) were only payable in installments from July to the end of the year. I am happy to learn that most Taxpayers demonstrated good compliance behaviour by paying their installments on time and in full,â€ he said.
The Minister said over and above, LRA also introduced administrative relief measures comprising speedy payment of refunds claims, waiver of additional taxes, penalty fees, storage fees etc. These measures were made to ease cash flow problems faced by businesses during those trying times. I should also mention that LRA was furthermore tasked to administer the rent relief measures, targeting small and medium businesses, on behalf of the Government.
For his part LRC Commissioner-General Thabo Khasipe expressed his excitement for their achievement as he lay bare the breakdown of the collected revenue.
â€œThe LRAâ€™s combined annual revenue target for 2020/2021 financial year was M5 605.37 billion, down from M 7. 591 billion due to COVID â€“ 19 impact. Against this target, the LRA remitted M 6.350.78 billion and therefore exceeded the target by M 745.51 million (13%). This is a tremendous effort by our tax administration. I am aware it was not easy as I was there throughout this period. I am therefore happy that ultimately LRA was able to meet and exceed their target under the tough economic environment we all know,â€ he said.
â€œIn summary, in terms of the revenue, we were assigned a target of M5.6 billion down from M 7.591 billion which means our target was reduced by M 1.9 billion (35%) due to the Covid-19 impact. However, LRA collected M 6.350 billion against the target of M 5.605 billion recording M 745 million positive out performance of the target which is 13% above the target,â€ he said.
The Commissioner General stated that Income Tax collected M3.274 billion targeted for the 2020/21 financial year which was exceeded by 14% remitting M3.743 billion, while Value Added Tax with a target of M2.331 billion made 12% above target remitting M2.608 billion. On the other hand, refunds paid amounted to M1.05 billion, 16% more than refunds paid in the 2019/20 financial year. The mining and the finance and insurance industry accounted for the largest share of refunds pay-out.
He indicated that collections data performance of LRA indicates that the tertiary sector is the most contributor to the revenue.
â€œThe economy is classified primarily in three sectors being Primary Sector which is agriculture, mining, forestry that is the natural resources side of the economy, Secondary Sector which is manufacturing and Tertiary sector which is the service sector,â€ he said.
Khasipe stated that further analysis indicates that the biggest contributor inside services or tertiary sector is actually wholesale and the retail sector. The wholesale and retail sector is almost 80% of the tertiary sector.
â€œHowever, we collect a lot of money but we also refund sectors as manufacture and mining. Since they export their output outside Lesotho by law they get refunded all the expenses they incurred in manufacturing whatever it is they are manufacturing. Because according to the strict terminology of vat law the exports in this country are zero rated,â€ he said.
â€œOur refunds this year were M1billion and this was a 16% increase from the year before this, was coming from the M900mllion and M700 million in the year before so there is a huge increase in refunds,â€ he said.
Meanwhile, the LRA board Chairperson Robert Likhang pointed out that the board is quite aware of the huge responsibility on its shoulders.
â€œWe are fully cognizant that the unity of any flock is dependent on the shepherd, as the Bible says â€˜you strike the shepherd the sheep will be scatteredâ€™, pastoral care and support are needed to ensure that LRA Management and staff become effective. We need your support and trust, Honourable Minister, and we are thankful that indeed it has generously come through,â€ he said.
He indicated that their role as Board is simply to provide strategy and policy oversight over the organization, and to ensure effective operational performance according to the mandate given to us by the establishing statute (LRA Act). The performance that we are reporting through the Commissioner General, has survived very difficult economic environment, made worse by the COVID 19. We can only thank Tax payers, now termed Tax clients for compliance, and this shows growing patriotism to our beloved country.