Botswana’s share from the SACU revenue pool is feared to plummet further when the five-member regional bloc review its revenue sharing formula, the tax collector has said.The Southern African Customs Union (SACU) receipts for the 2010/11 financial year surprised the market when it exceeded the target by 21.4 percent to P6.2 billion.
Member states use a revenue sharing formula that South Africa hates because it has a massive burden on its treasury and calls for a more equitable formula. SACU revenue contributes 31 percent to Botswana’s tax revenue.
Botswana Unified Revenue Service (BURS) Commissioner General, Ken Morris revealed in his latest annual report that the revision of the formula, which was kick started in 2011, is highly likely to see Botswana recording a reduction, in its revenue shares in the near future.
Botswana’s share from the SACU revenue pool decreased from P7.9 billion in 2009/10 to P6.2 billion in 2010/11, representing a 22 percent decrease. Although Morris attributed the decrease to a deduction in the members’ shares as an adjustment to account for the deficit in the Common revenue Pool (CRP), which was released in the 2010/11 financial year, he also highlighted the fact that the revision of the revenue sharing formula would eventually reduce Botswana’s revenue share.
BURS Chairman, Dr Taufila Nyamadzabo would not be drawn into discussing the effects that the new revenue sharing formula would have on Botswana. He would not even discuss what kind of revenue sharing formula his ministry has suggested to SACU. “Negotiations are still ongoing we would not want to compromise them,” he said.
Also secretary of economic affairs in the Ministry of Finance, Dr Nyamadzabo said while member states were required to present their draft choices of a sharing formula, SACU has a more profound role to review similarities in what the members states want, so as to create a sharing formula that would be best for all parties.
“Of course there are going to be some negative as well as positive effects of the revised formula because member states have got different needs,” he said. The decision to review the revenue sharing formula was reached by South Africa, Botswana, Namibia, Lesotho and Swaziland, the SACU member states during the 2011 financial year, South Africa especially felt that the current sharing formula was disadvantageous to it.
The revenue pool also sought to address industrialisation, which lags behind in other member states except South Africa.Dr Nyamadzabo told Botswana Guardian that all member states have presented their formula proposals to SACU. “We are currently awaiting SACU decision, and then we will share the information with you,” he said.
For the 2010/11 financial year, SACU revenue pool collected R38 billion from R52 billion recorded the prior year due to subdued economic performance and decline in revenue collections from all member states except South Africa, leading to a decrease in their share revenues.
For the period, South Africa received the highest share of R23 billion, followed by Botswana at R6 billion. Namibia, Lesotho and Swaziland received R5 billion, R2.1 billion and R2 billion respectively.