Taxman blames outstanding tax bills for poor collection

Seabata Mahao

Revenue Service Lesotho (RSL) blamed the government’s failure to pass key tax laws for its inability to meet its revenue collection target for the 2022/23 financial year.

The taxman’s combined annual revenue target for the year was M8 699.78 billion, but it only managed to collect M7, 833.57 billion, thus missing the target by M866. 21 million or ten percent.

The remitted M7, 833.57 billion is broken down into M4, 282.58 billion from income tax, and M3, 550.99 billion from Value Added Tax (VAT).

Both these categories missed their revenue collection targets, with the income tax falling short by M581.56 million or 12 percent, and VAT missing its target by M284.65 million or seven percent.  

Despite missing its target, the RSL has collected M550.85 million, or seven percent more than it had collected during the 2021/22 financial year, amid the Russia- Ukraine war and Covid-19 weakened global economy. 

RSL’s acting Commissioner General, Mosuoe Mapetla, this week highlighted that their revenue collection performance is attributed to the government’s failure to pass key tax laws during the course of the financial year in question.

The Tax Administration Bill, VAT Amendment Bill, and Income Tax Bill were scheduled to be implemented during the 2022/23 financial year under the past Moeketsi Majoro-led administration but were ultimately not passed.

“The performance we are reporting on today translates to the revenue predicted against the bills that are still outstanding namely, Tax Administration Bill, VAT Amendment Bill, Income Tax Amendment Bill, and the Tobacco and Alcohol Products Levy, which only got to be implemented in March 2023,” Mapetla said.

“We remain hopeful that all the outstanding bills will be passed on time to enable growth in terms of revenue collection. Our goal is to raise much-needed income to support the government’s development objectives, and we are humbled by individuals who faithfully comply with their tax obligations without compulsion.”

He called on everyone to adopt the culture of voluntary compliance, as it is the right thing to do.

“I must emphasise that we have constantly seen an increase in positive tax compliance behaviour, for which we are quite grateful. Overall, we have seen an increase in the number of people enrolling for taxes. We have also seen an increase in the number of people submitting their tax returns and making timely payments on those taxes,” Mapetla said.

Mapetla indicated that they will soon introduce automatic compliance whereby all clients will become tax compliant without lifting a finger, meaning that tax compliance will become a default option.

“Taxation remains the primary source of government revenue, thus it is critical that we all pay our fair share. Keep in mind that it is for the welfare of our country, Lesotho, and its people. As a result, I would want to implore those taxpayers whose compliance appears to be below par to make reparations and do the right thing. Paying taxes, especially freely, is the most patriotic thing any of us can do.”