The Minister of Finance Thabo Sophonea had said in his budget speech presentation for the financial year 2021/22 that government intends to come up with policy measures that are aimed towards improved revenue to make his budget a reality.
On Tuesday last week, the government revealed in its consolidated report on the budget estimates of revenue and expenditure for the financial year 2021/22 that in order to realise the budget for the fiscal year, part of the plan is to introduce new legislation on various types of tax and its administration with the aim of creating new revenues and enhancing collection efficiency measures.
Some of the measures include increasing the VAT rate on electricity by one percent, from nine percent. The increase is projected to yield M93.5 million in revenue collection.
The report was presented by the portfolio committee on the economic and development cluster.
But, the intentions, seen as productive by the portfolio committee have not been positively welcomed by the Consumer Protection Association (CPA), a membership based body which serves to promote and protect consumer rights in Lesotho.
The argument is that revenue generated in the country does not entirely serve its purpose, but instead, the same government spends the money for its own benefit, on salaries among others.
That means, while consumers will suffer through the implementation, Members of Parliament will on the other hand be ready to enjoy the returns.
The Executive Director of the CPA Nkareng Letsie revealed in an interview with Metro that if implemented, the undertaking will be detrimental on the side of the consumers who are already hard hit by the effects of COVID-19 pandemic since last year.
“Looking at our standards of living, the increase would be damaging to consumers because already, most are struggling to make ends meet. The problem is that even if they increase VAT rate to increase revenue, they also increase their own consumption on the other side through increased salaries and other things. To us, the increase would be damaging and I wonder what they think of us,” Mr Letsie said on Tuesday.
Recently, the government has been slammed for the introduction of M5 000 fuel allowances to MPs together with an earlier 10 percent salary adjustment.
The decision was furiously rebuffed by members of the public who labeled it an immoral and careless move, particularly during these desperate times of the COVID-19 pandemic.
Local analyst, Tebello Tjapela who is also a final year student in Master of Science (MSc) in Economics at the National University of Lesotho (NUL) demonstrated a different view, accentuating generally that a move by government has its own benefits.