Botswana Unified Revenue Services (BURS) is owed P3.3 billion from uncollected tax arrears, with interest and penalties accounting for majority of the arrears. According to BURS 2018 annual report, BURS is struggling to manage its debt by effectively and efficiently collecting the arrears to ensure the funds reach government coffers.
The report is destined to be tabled by the Minister of Finance and Economic Development Dr. Thapelo Matsheka at Parliament. “In spite of efforts to reduce the arrears through recoveries and remissions, the total outstanding arrears as at 31st March 2018 stood at P3, 287, 089, 207,” the report indicated. The current amount is an increase of 21 percent over the total outstanding as at 31st March 2017 which was P2.7 billion.
The report noted that the collection of arrears as at 1st April 2017 comprised of P1, 4 billion and P1.2 billion being value Added tax (VAT) and Assessed Income Tax respectively. Collections of old arrears for the 2017/18 financial years were P288 million whilst discharges, remissions and waivers amounted to P392 million, the report highlighted adding that the uncollected arrears that accrued in the 2017/18 financial year stood at P1, 3 billion as at 31st March 2018.
“The outstanding balance indicates that the interest and penalties account for 66 percent of the arrears whilst the principal tax outstanding is 34 percent. The bulk of the arrears bare charges for late payment of tax and late filing of returns,” it states. The Annual Report acknowledged that there were still some number of challenges experienced which negatively impacted optimum service delivery.
“The BURS strategy for e-services uptake still faces a challenge of not getting a good response from taxpayers despite the uptake strategy that was implemented from financial year 2016/17,” it said. It also pointed out that this is shown by the percentage uptake for filing of returns in 2017/18 which was below target for all categories of tax returns except for Large taxpayers ‘VAT returns.
The Annual report said that underperformance of VAT and increasing tax arrears were the two major sources of concern for the Revenue Service and served to reverse the gains that were being made with respect to the revenue mobilisation drive. “Because of these two major challenges the Revenue Service has decided to intensify its inspection on business operations through the Debt Management Unit to follow up tax arrears as well as to ascertain tax compliance statuses of companies,” the report highlights.
It is understood that taxpayer education workshops and publicity campaigns will continue to be carried out under the strategy for e-services uptake in order to address the challenges. Meanwhile, the report also observed that in the same period (during the 2017/18 financial year) 808 seizures were recorded compared to 579 in 2016/17.
“The North region recorded the highest number of seizures which stood at 562. The seized goods were mainly cigarettes, tobacco leaves, vehicles and parts, assorted clothing, medicaments, ornaments, fuel and containers, drums, kitchenware, stationery, substances suspected to be dagga, food items including Agricultural products, electronic appliances, alcohol beverages etc.” The main reason for seizing the goods, according to the report was due to non-declaration or ex-detentions or false declaration or transporting smuggled or illicit goods.
In another matter, a total of 800 detentions were recorded during the financial year under review compared to 688 in the previous year. “North region recorded the highest number of detentions which stood at 561. The detained goods were mainly vehicles, various food items including Agricultural products, medicaments, clothing, beauty products, electric appliances, fuel, alcohol beverages, etc.,” it points out.
Furthermore, it stresses that the main reason for detentions were either pending production of proper documents/permits or pending proper clearance or payment of taxes/penalties or re-exportation or investigation/valuation. In line with its mandate, BURS performs tax assessment and collection functions on behalf of the Government and take appropriate measures to counteract tax evasion on the one hand, and to improve taxpayer service to a much higher level on the other.
The Botswana Unified Revenue Service (BURS) was established by an Act of Parliament in 2004, the Botswana Unified Revenue Service Act of 2003 and came into operation in August 2004.
Government is currently sitting on 4 400 vacant posts that remain unfilled in the civil service. This is notwithstanding the high unemployment rate in Botswana which has been exacerbated by the recent outbreak of the deadly COVID-19 pandemic.
Just before the burst of COVID-19, official data released by Statistics Botswana in January 2020, indicate that unemployment in Botswana has increased from 17.6 percent three years ago to 20.7 percent. “Unemployment rate went up by 3.1 percentage between the two periods, from 17.6 to 20.7 percent,” statistics point out.
Leading commercial bank, First National Bank Botswana (FNBB), expects the central bank to sharpen its monetary policy knife and cut the Bank Rate twice in the last quarter of 2020.
The bank expects a 25 basis point (bps) in the beginning of the last quarter, which is next month, and another shed by the same bps in December, making a total of 50 bps cut in the last quarter. According to the bank’s researchers, the central bank is now holding on to 4.25 percent for the time being pending for more informed data on the economic climate.
An audit of the accounts and records for the supply of food rations to the institutions in the Northern Region for the financial year-ended 31 March 2019 was carried out. According to Auditor General’s report and observations, there are weaknesses and shortcomings that were somehow addressed to the Accounting Officer for comments.
Auditor General, Pulane Letebele indicated on the report that, across all depots in the region that there had been instances where food items were short for periods ranging from 1 to 7 months in the institutions for a variety of reasons, including absence of regular contracts and supplier failures. The success of this programme is dependent on regular and reliable availability of the supplies to achieve its objective, the report said.
There would be instances where food items were returned from the feeding centers to the depots for reasons of spoilage or any other cause. In these cases, instances had been noted where these returns were not supported by any documentation, which could lead to these items being lost without trace.
The report further stressed that large quantities of various food items valued at over P772 thousand from different depots were damaged by rodents, and written off.Included in the write off were 13 538 (340ml) cartons of milk valued at P75 745. In this connection, the Auditor General says it is important that the warehouses be maintained to a standard where they would not be infested by rodents and other pests.
Still in the Northern region, the report noted that there is an outstanding matter relating to the supply of stewed steak (283×3.1kg cans) to the Maun depot which was allegedly defective. The steak had been supplied by Botswana Meat Commission to the depot in November 2016.
In March 2017 part of the consignment was reported to the supplier as defective, and was to be replaced. Even as there was no agreement reached between the parties regarding replacement, in 51 October 2018 the items in question were disposed of by destruction. This disposal represented a loss as the whole consignment had been paid for, according to the report.
“In my view, the loss resulted directly from failure by the depot managers to deal with the matter immediately upon receipt of the consignment and detection of the defects. Audit inspections during visits to Selibe Phikwe, Maun, Shakawe, Ghanzi and Francistown depots had raised a number of observations on points of detail related to the maintenance of records, reconciliations of stocks and related matters, which I drew to the attention of the Accounting Officer for comments,” Letebele said in her report.
In the Southern region, a scrutiny of the records for the control of stocks of food items in the Southern Region had indicated intermittent shortages of the various items, principally Tsabana, Malutu, Sunflower Oil and Milk which was mainly due to absence of subsisting contracts for the supply of these items.
“The contract for the supply of Tsabana to all depots expired in September 2018 and was not replaced by a substantive contract. The supplier contracts for these stocks should be so managed that the expiry of one contract is immediately followed by the commencement of the next.”
Suppliers who had been contracted to supply foodstuffs had failed to do so and no timely action had been taken to redress the situation to ensure continuity of supply of the food items, the report noted.
In one case, the report highlighted that the supplier was to manufacture and supply 1 136 metric tonnes of Malutu for a 4-months period from March 2019 to June 2019, but had been unable to honour the obligation. The situation was relieved by inter-depot transfers, at additional cost in transportation and subsistence expenses.
In another case, the contract was for the supply of Sunflower Oil to Mabutsane, where the supplier had also failed to deliver. Examination of the Molepolole depot Food Issues Register had indicated a number of instances where food items consigned to the various feeding centres had been returned for a variety of reasons, including food item available; no storage space; and in other cases the whole consignments were returned, and reasons not stated.
This is an indication of lack of proper management and monitoring of the affairs of the depot, which could result in losses from frequent movements of the food items concerned.The maintenance of accounting records in the region, typically in Letlhakeng, Tsabong, and Mabutsane was less than satisfactory, according to Auditor General’s report.
In these depots a number of instances had been noted where receipts and issues had not been recorded over long periods, resulting in incorrect balances reflected in the accounting records. This is a serious weakness which could lead to or result in losses without trace or detection, and is a contravention of Supplies Regulations and Procedures, Letebele said.
Similarly, consignments of a total of 892 bags of Malutu and 3 bags of beans from Tsabong depot to different feeding centres had not been received in those centres, and are considered lost. These are also not reflected in the Statement of Losses in the Annual Statements of Accounts for the same periods.