He said aligning the VAT in Lesotho with South Africa would ensure that the government of Lesotho does incur extra costs while trying to implement the VAT agreement between the two countries as the taxes would still be at different rates (14% in Lesotho and 15% in South Africa). South Africa had announced its VAT increase from 14% to 15% with effect from April 1. The MP Litsoane Litsoane of Bela-Bela supported the motion on grounds that it would boost the country’s economy. MP Thabang Kholumo of Qalo constituency said there was no option but to adopt the motion, citing the Finance Minister’s point that its implementation would increase tax revenue.
He however expressed reservations that since the government have not followed the example set by South Africa of introducing zero-rated food items, which are household essentials such as brown bread, cooking oil, rice, and canned fish among others, it means the poor would be hard hit by the VAT increase. He said he hoped that the money that would be collected will be channelled to the National University of Lesotho (NUL) so that it assists the institution ensure that students write their examinations.
In the end, the MPs of Movement for Economic Change (MEC) and some opposition MPs voted with government while some opposition members walked out. The house also adopted the reports on Income Tax (Amendment of Monetary Amounts) regulations 2018 as well as the report on VAT Added Tax (Remission of Additional Tax and penalties), and (Voluntary disclosure) Regulations 2018. Lena