The means by which government finances its expenditure by means of imposing charges on citizens and corporate entities, more affectionately known as taxation, is an integral tool for any government. This is truer for a country that is in the process of addressing inequalities of wealth distribution and curb the effects that poverty has had on a significant portion of its populous. The greatest adversary to the successful implementation of the process of taxation could, in some cases, be a by-product of poverty itself.
The lack of adequate education on the taxation process is one of the key factors that may render the Harambee Prosperity Plan (HPP), which is ostensibly the country’s guideline towards economic prosperity, ineffectual.
The fact that a large portion of Namibians, both those who have completed the formal school system and those who have been failed by it, share in the lack of understanding of how the taxing system works and those who are employed play a minimal role in this process as taxation is handled by their employers through the Pay As You Earn (PAYE) format, while the other forms of taxation that affect them directly such as the Value Added Tax (VAT) are handled by the service providers from whom they purchase their goods and services. While this affords the larger spectrum of the populous the luxury of not being burdened by the nitty-gritties of the taxation process, it also offers the adverse effect of not allowing individuals to understand the significant role they play in the process of availing funds to government to spend on critical areas of development. Studious individuals may attribute the benign attitude of most Namibians in matters such as the famed “N$2.4 billion parliament” to the inadequate understanding of the role they play in government expenditure.
An efficient taxation process is one that curtails any seepage of funds so as to optimise the amount of funds available for government to spend on key projects. This is not a reality in Namibia as millions are lost annually owing largely to the fact that taxation is deemed too cumbersome a process for people to understand. There is reluctance from individual taxpayers to ensure that their taxation process is handled in the most efficient manner possible. The problem, although largely attitudinal, is one that sees government losing out on millions every year through the aforementioned seepage.
Vital government projects that have been outlined by the HPP such as the Food Banks, the refurbishment of the Vocational Education and Training system as well as the support towards entrepreneurship with the view of creating employment, not to mention the country’s need to development transport infrastructure to make the country a transport and logistics hub are all cost-extensive. It is therefore imperative that funds become readily available if these projects are ever to be realised. This eventuality can never come to pass, however, without a stern overhaul of the taxation process. If the government has lost so much money through a flawed taxation process in the previous years, it makes little sense to rely on the same process to work effectively without drastic changes so as to afford government the requisite funds to make the HPP more than just ‘a plan’.
The success of the levying system is also one that requires urgent reform, with examples existing in the transport sector where road-users, on certain portions of Namibian roads, are levied based on the assessment of the kilometres they claim to have travelled. This is a clear example of how flawed the system of collecting funds is for government and without these drastic changes in the taxation process, it is not clear where the funds to realise the HPP, which has been described as overly ambitious by some, will come from.