In an effort to restore the financial balance which has since been affected by the recession culminated by the Corona Virus Disease (COVID-19), the government has come up with some measures which mostly involve tax returns.

The Minister of Finance and Economic Development, Honourable Dr. Thapelo Matsheka has indicated that the Government Investment Account (GIA) which the government has been depending on in case of deficits has been greatly dented hence there is a need to look for other means. “In the past, budget deficits have been largely financed by drawing down on accumulated savings held in the Government Investment Account (GIA), which is the Government’s portion of the foreign exchange reserves held at the Bank of Botswana. This option is no longer available, as the GIA has been depleted by past drawdowns and the revenue shortfall in the 2020/2021 fiscal year. The level of the GIA has drastically declined from an opening balance of P18.5 billion at the end of 2019/20 Financial Year to P5.6 billion as at November 2020, a decline of 72 percent” he revealed.

The following are the proposed tax changes;

  1. The rate of Value Added Tax (VAT) will be increased from 12 percent to 14 percent with effect from 1st April 2021
  2. The fuel levy will be increased by P1 per litre on 1st April 2021.
  3. Company owners and shareholders withholding tax on dividend income will rise from 7.5 percent to 10 percent.
  4. Government will introduce a levy on sweetened beverages related to their sugar content, at a rate of 2 thebe per gram of sugar above a content of 4g of sugar per 100 millilitres.
  5. During the coming Financial Year, the necessary statutory instrument will be introduced to ensure that the plastic bag levy becomes operational.
  6. Levy on second-hand vehicles imported into Botswana will be imposed.

In addition to tax, as an effort to reduce the wage bill, Government will abolish 50 percent of vacant positions, in value, as of 1st April, 2021.

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