The budget estimates were presented at the back of challenging economic conditions resulting from the ongoing COVID-19 pandemic, which led to collapse of some major economic sectors in the country.
LCCI has identified loopholes in the budget estimates, noting among others that while tax revenues have been declining in the past year, the budget speech did not indicate anything towards increasing taxes to cover the losses.
There was no mention of possibilities of a tax credit for the coming financial year.
LCCI made reference to South Africa which has reduced tax rates for income tax.
As a major economic hub in the SACU region, some major economic decisions in South Africa have a direct impact on Lesotho, which is completely surrounded by South Africa.
“It is worth noting that South Africa has actually reduced tax rates for income tax, also worth noting that South Africa intends to recover the tax losses through excessive increase on excise duties which have been increased by 8 percent, which is far way more than inflation. As part of SACU, Lesotho will have same increase on excisable products.
“This means that Lesotho will benefit from the increase in taxes in these products, which will impact VAT and Income tax as well as SACU revenues on excisable products that Lesotho produces (alcohol and tobacco),” LCCI said in letter demonstrating its input on the 2021/22 national budget.
The current proposed tobacco and alcohol levy, the LCCI revealed, will not assist government to increase revenue as it is not supported by any research or studies that could properly guide it.