Parliament queries LRA’s ability to collect non tax revenue

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Bereng Mpaki

THE Economic and Development cluster committee of the National Assembly has expressed its reservations on the ability of Lesotho Revenue Authority (LRA) to collect non tax revenue.

The authority has now been tasked with collecting non tax revenue as government moves to consolidate its sources of revenue.

Finance minister Moeketsi Majoro revealed this new additional task for the LRA in his recent budget speech for the 2019/2020 financial year that was recently tabled in the joint sitting of parliament.

The LRA, which was established through the LRA Act of 2001, is the main body responsible for collection of specified revenue on behalf of the government.

Prior to Dr Majoro’s directive, the authority’s operations had been limited to collecting tax-related revenues.

“There are additional fiscal stabilisation measures to be implemented in the 2019/20 financial year aiming to regulate spending and to close loopholes,” Dr Majoro said.

“These include tightening previous measures and introducing additional ones. During the 2019/20 financial year government will…instruct LRA to collect non-tax revenues…” he added.

However, the chairperson of the economic and development cluster committee, Sam Rapapa has expressed concerns on the authority’s ability to immediately perform this additional duty.

“The committee applauds the government for expanding the LRA’s mandate to enable it to collect non tax revenues. However, the committee is concerned about the LRA’s preparedness and capacity to undertake this initiative in this financial year,” Mr Rapapa said.

For his part, LRA commissioner general, Thabo Khasipe expressed confidence that they can start collecting non tax revenue this year but also conceded that the playing field may not be completely levelled at the moment.

“I believe by the time the 2019/20 financial year ends we will have begun collecting non tax revenue.

“We have to hit the ground running given the increased importance of domestic revenue collection and the country’s challenging financial situation,” Mr Khasipe said.

He said although the legal side of the task may need to be reviewed with the necessary resources to facilitate the process also needing to be mobilised, there is an urgent need to start right away.

Asked how much they expect to collect from non-tax revenue, Mr Khasipe said he expects a positive impact from the collections on the country’s revenue.

“It is difficult to estimate but we believe there is a lot of leakage of government revenue at the moment, which we believe that by LRA taking over will be drastically reduced. We believe we will enhance revenue collection.”

He however indicated that when the LRA took over the domestic tax revenue collection, they were able to increase the revenue by about 300 percent at Maseru Bridge alone in the first year.

“So, I would not be surprised if we are to have a similar impact with non-tax collection because we already have the experience,” Mr Khasipe said.

Meanwhile, Mr Rapapa welcomed the government’s intention to enact legislation that will enforce prudent management of its fiscal policy.

“This year’s budget is about tightening the fiscal conditions on one hand and spurring faster growth on the other. The government therefore proposes fiscal rule (coined around the anchoring government expenditure to permanent SACU receipts) and will be passed as law during the 2019/20 fiscal year.

“This is a significant milestone and will serve as an important anchor of fiscal policy.

“The anchor of fiscal policy has traditionally been the fiscal deficit equivalent to 3 percent of GDP (consistent with fiscal sustainability globally) however, it was normally breached because it was not legislated.

“Fiscal rules will ensure that fiscal policy remains sustainable — a breach of it during budgetary preparation will be a breach of the law. Therefore, enactment of a law on fiscal rules is instructive and should be followed up,” Mr Rapapa said.

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