By ‘Majirata Latela
The Lesotho Revenue Authority (LRA) has been directed by the ministry of finance to meet a target of collecting a combined revenue of over M8-billion for this financial year.
The minister of finance Thabo Sophonea said this during the launch of the filing season and announcement of revenue outcomes, in Maseru on Wednesday this week. He said with LRA’s track record and strategies that have been developed, the target is achievable.
LRA has exceeded its target by M638million (9.7percent) after collecting remittances of M7billion in the last financial year.
Sophonea further showed that the need for funding has increased due to prevailing climatic conditions, characterized by the deterioration and destruction of the national infrastructure, mainly roads and bridges countrywide, and the ongoing fight against Covid-19.
“Tax remains the main source of government revenue, so it is important that we all contribute our fair share of taxes. Remember, it is for the benefit of our country, Lesotho, and her people. 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.
“I, therefore, wish to plead with those taxpayers whose compliance at this moment is not where it should be, to make amends and do the right thing. Paying tax, and doing so voluntarily, is the most patriotic thing that anyone of us can do.
“As a ministry whose key mandate is to mobilise the much-needed revenue to support government’s developmental initiatives, we are humbled by those taxpayers who religiously comply with their tax obligations without any form of coercion,” he said.
Sophonea further pleaded with parliament to prioritise legal frameworks such as 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 said the Bills will that will enable LRA to discharge its mandate effectively and efficiently.
“I strongly believe that the enactment of these legal instruments and others that are still in the pipeline, will improve tax collections and will also pave way for LRA to venture into collection of non-tax revenue. I am expecting LRA to be able to develop a model and a clear road map towards collection of nontax revenue. We need to ensure that government collects all revenue owed to it,” he said.
LRA’s board chairperson, Robert Likhang, commended LRA saying it has shown an indomitable spirit of resilience despite the pressures that existed in the past year. He said LRA has also sustained good revenue performance over the last two years.
He said despite the adverse impact of the pandemic on the economy, LRA has continued to mobilize revenue sustaining a positive trajectory.
“The good revenue performance reflects improving macroeconomic environment because of relaxation of Covid-19 containment measures, and sustained implementation of enhanced compliance efforts by the Authority.
“During the period under review, LRA implemented several revenue enhancement initiatives that enabled the Authority to enhance revenue collection. This was largely driven by enhanced compliance efforts through forged strategic partnerships and the implementation of new tax measures focused on ensuring that all taxpayers pay their dues.
“The good performance is also attributed to the Authority’s focus on improving Clients’ service experience, through use of advanced technology, enhanced dispute resolution processes, efficient trade facilitation, stakeholder engagements, tax base expansion, and capacity building of LRA staff,” Likhang said.
He said with LRA’s aspiration to collect over M8-billion in 2022/23 the target is premised on things such as the phenomenal impact that digital technology has on businesses worldwide, it is creating exciting and viable new opportunities for business and hence revenue growth.
LRA chief executive, Thabo Khasipe also pointed out that the LRA was given a target of M6.6-billion for the year 2021/22 and that means the LRA exceeded the target with M638million. He said for the past two years LRA has been exceeding target and for the last financial year they exceeded target with 13 percent.
He said since the last month of the financial year (April) LRA has exceeded target in for nine years in the financial year and only missed target for three months. In July he said LRA exceeded target by 25 percent.
“For this financial year that I am reporting between income tax and Value Added Tax (VAT) most of the collection was from VAT at M3.8-billion which is 52.78 percent. Income tax recorded a 42 percent.
“Public administration and defence compulsory and social security is the highest in category sector that collected more income tax with 20 percent. It was followed by income and financial activities (Banks and insurance activities) with 18 percent income tax. Mining and quarrying follow by 15 percent.
“62.6 percent of income tax came from employees (Pay as You Earn) while companies only contributed 22 percent. The fact is most of the income tax comes from employees. Government is the biggest contributor of PAYE,” Khasipe said.
