Persistent failure to provide genuine tax invoice documentations and undervaluing imported goods by business operators could force the Ministry of Finance and Economic Development Planning (MEDP) to increase tax, Botswana Unified Revenue Services (BURS) Acting Commissioner General (CG) Segolo Lekau has told WeekendPost.
This, Lekau says, emanate from the fact that a number of businesses especially those importing goods are trespassing the customs law. “It appears the citizens are working hand in hand with these businessmen and agree to be given falsified payment documents that do not necessarily depict the real price. At the end the government is losing a lot of money because we claim less than we should be from SACU,” said the acting CG.
It is said a car will be registered to enter Botswana at a distorted price of P4, 500 while it’s actual price maybe P45, 000. This then leaves Botswana losing out. This, it is said does not happen in other countries hence most operators opt for Botswana route as it is easy to manipulate prices. Lekau continued; “This now may force the government to increase the tax because she may feel that what she is getting is very low as she will not be getting the actual custom duty and VAT corresponding with the product imported.
Remember tax is a contract between the state and its citizen, it helps to develop the country.” One of BURS’ mandates is to advise the MEDP on matters relating to the administration and collection of tax and perform other functions in relation to tax as the Minister may direct. Already there is a narrative that the government may increase tax as way of cushioning for its ballooning expenditure following impulse increase of public servants wages.
The government conceded through Finance Minister, Dr Thapelo Matsheka last year that the country’s fiscal position is not stable as it was projected and that the growing budget deficits might have to be tackled. This should be through some adjustments as the revenue supported by diamonds fails to keep up with the government increased expenses.
“We have started an exercise similar to post audit clearance, looking at how much these cars are sold and we have found out that law is not being followed, there is lot of undervaluation and we have decided to detain some of the properties,” Commissioner General Lekau revealed. BURS is perturbed by non-compliance such that already they have launched crusades to carry own audit on a number of factories to see if there is undervaluation of goods.
1522 vehicles have been confiscated from 24 car dealerships in Mogoditshane, as the tax man starts to crack the whip. “We are going to plug those inefficiencies by applying stringent measures,” BURS General Manager Investigations Compliance and Enforcement, Kaone Molapo cautioned. Following the seizure of cars in Mogoditshane, Lekau told this publication that they may now start setting prices for ‘Fong-Kong’ cars.
“We are permitted by the law and even the best international practices dictates that, if we don’t agree with the product price on the invoice we can compare and set our own looking at the market comparable. So, it is true, that we may set the price soon that is if the operators do not dust themselves and comply with taxation laws because we want voluntary compliance.”
This has been echoed by Molapo who said; “They are pushing us to determine prices for the products and goods. Compliance should be at maximum.” The extent of the seriousness of the matter is such that if an ordinary person fails to show original tax invoice sheet of any imported product heads will roll which may include repossession of the product.
To those that have circumvented the tax law, the authorities say it is ‘not yet Uhuru’ as the crusade is still on. “There is what we call post clearance audit. We will go to these people to demand genuine statements and carry our own audit because the country has lost a lot of money,” Molapo said at a media briefing this week.
For Botswana to have been grey listed for money laundering and financing terrorism was owing to factors like these. Botswana is a member of the Eastern and Southern Anti-Money Laundering Group (ESAAMLG) an affiliate of the Financial Action Task Force (FATF) and she is doing everything possible to close any leakages of going back to being grey listed or possibly black listing.
The tax law has been stiffened and anyone crossing the border should declare any amount from P10, 000 upwards and the goods. “We have reviewed our law and penalties are now hefty for non-declaration. You can be charged P1 million or treble the value of the goods. BURS’ mandate is to perform tax assessment and collection functions on behalf of the government. And to take appropriate measures to counteract tax evasion.
The authority as per its act is mandated to administer and enforce the revenue laws, promote compliance with the revenue laws and to take such measures as may be required to improve services given to taxpayers with view of improving efficiency and maximizing revenue collection.
BURS remains optimistic
Meanwhile BURS continues to be optimistic in revenue collection as some strategies had been put in place to turnaround the performance of the organization and meet the target going forward. BURS officials have vowed to intensify debt collection, strengthen the verification of refunds before payment and collect the outstanding withholding tax and VAT from imported service from government projects.
The emergence of new generation tax issues such as transfer pricing also pose a challenge to the BURS. Furthermore unemployment also poses a threat in terms of lowering revenue income because an increase in number of people without income results in the absence of taxation thereby reducing the total tax revenue from employment income. BURS has set a target of P45 billion for the financial year 2019/2020.
The P250 million National Petroleum Fund (NPF) saga that has been before court since 2017 seems to be losing its momentum with a high possibility of it being thrown out as defence lawyers unmask incompetency on the part of the Directorate of Public Prosecution (DPP).
The Gaborone High Court this week ruled that the decision by the State to prosecute Justice Zein Kebonang and his twin brother, Sadique Kebonang has been reviewed and set aside. The two brothers have now been cleared of the charges that where laid against them three years ago.
The United States (US) will on the 3rd of November 2020 chose between incumbent Donald Trump of the Republicans and former Vice President Joe Biden of the Democrats amid the coronavirus pandemics, which has affected how voting is conducted in the world’s biggest economy.
Trump (74) seeks re-election after trouncing Hillary Clinton in 2016, while Biden (77) is going for his first shot as Democratic nominee after previous unsuccessful spells.
US Presidents mostly succeed in their re-election bid, but there have been nine individuals who failed to garner a second term mandate, the latest being George W H. Bush, a Republican who served as the 41st US President between 1989 and 1993.
Dr Mark Rozell, a Dean of the School of Policy and Government at George Mason University in Arlington, Virginia describes the complex US electoral system that will deliver the winner at the 3rd November elections.
“The founders of our Republic de-centralised authority significantly in creating our constitutional system, which means that they gave an enormous amount of independent power and authority to State and local governments,” Dr Rozell told international media on Elections 2020 Virtual Reporting Tour.
Unlike parliamentary democracies, like Botswana the United States does not have all of the national government elected in one year. They do not have what is commonly called mandate elections where the entire federal government is elected all in one election cycle giving a “mandate” to a particular political party to lead, and instead US have what are called staggered elections, elections over time.
The two house Congress, members of the House of Representatives have two-year long terms of office. Every two years the entire House of Representatives is up for re-election, but senators serve for six years and one third of the Senate is elected every two years.
For this election cycle, US citizens will be electing the President and Vice
President, the entire House of Representatives and one third of the open or contested seats in the Senate, whereas two thirds are still fulfilling the remainder of their terms beyond this year.
An important facet of US electoral system to understand given the federalism nature of the republic, the US elect presidents State by State, therefore they do not have a national popular vote for the presidency.
“We have a national popular vote total that says that Hillary Clinton got three million more votes than Donald Trump or in Year 2000 that Al Gore got a half million more votes than George W. Bush, but we have what is called a State by State winner takes all system where each State is assigned a number of electors to our Electoral College and the candidate who wins the popular vote within each State takes 100 percent of the electors to the Electoral College,” explained Dr Rozell.
“And that is why mathematically, it is possible for someone to win the popular vote but lose the presidency.”
Dr Rozell indicated that in 2016, Hillary Clinton won very large popular majorities in some big population States like California, but the system allows a candidate to only have to win a State by one vote to win a 100 percent of its electors, the margin does not matter.
“Donald Trump won many more States by smaller margins, hence he got an Electoral College majority.”
Another interesting features by the way of US constitutional system, according to Dr Rozell, but extremely rare, is what is called the faithless elector.
“That’s the elector to the Electoral College who says, ‘I’m not going to vote the popular vote in my State, I think my State made a bad decision and I’m going to break with the popular vote,’’ Dr Rozell said.
“That’s constitutionally a very complicated matter in our federalism system because although the federal constitution says electors may exercise discretion, most States have passed State laws making it illegal for any elector to the Electoral College to break faith with the popular vote of that State, it is a criminal act that can be penalized if one is to do that. And we just had an important Supreme Court case that upheld the right of the states to impose and to enforce this restriction”
There are 538 electors at the Electoral College, 270 is the magic number, the candidate who gets 270 or more becomes President of the United States.
If however there are more candidates, and this happens extremely rarely, and a third candidate got some electors to the Electoral College denying the two major party candidates, either one getting a majority, nobody gets 270 or more, then the election goes to the House of Representatives and the House of Representatives votes among the top three vote getters as to who should be the next President.
“You’d have to go back to the early 19th century to have such a scenario, and that’s not going to happen this year unless there is a statistical oddity, which would be a perfect statistical tie of 269 to 269 which could happen but you can just imagine how incredibly unlikely that is,” stated Dr Rozell.
BLUE STATES vs RED STATES
Since the 2000 United States presidential election, red states and blue states have referred to states of the United States whose voters predominantly choose either the Republican Party (red) or Democratic Party (blue) presidential candidates.
Many states have populations that are so heavily concentrated in the Democratic party or the Republican party that there is really no competition in those states.
California is a heavily Democratic State, so is New York and Maryland. It is given that Joe Biden will win those states. Meanwhile Texas, Florida and Alabama are republicans. So, the candidates will spent no time campaigning in those states because it is already a given.
However there are swing states, where there is a competition between about five and 10 states total in each election cycle that make a difference, and that is where the candidates end up spending almost all of their time.
“So it ends up making a national contest for the presidency actually look like several state-wide contests with candidates spending a lot of time talking about State and local issues in those parts of the country,” said Dr Rozell.
High Commissioner of the Federal Government of Nigeria to Botswana, His Excellency Umar Zainab Salisu, has challenged President Dr Mokgweetsi Masisi to move swiftly and lobby Africa’s richest man, Nigerian Billionaire, Aliko Dangote to invest in Botswana.
Speaking during a meeting with President Masisi at Office of President on Thursday Zainab Salisu said Dangote has expressed massive interest in setting up billion dollar industries in Botswana. “We have a lot of investors who wish to come and invest in Botswana , when we look at Botswana we don’t see Botswana itself , but we are lured by its geographic location , being in the centre of Southern Africa presents a good opportunity for strategic penetration into other markets of the region,” said Salisu.