…says govt won’t bail out ailing parastatals
Mathatisi Sebusi
THE government will not bail out any ailing parastatals that owe taxes to the Revenue Services Lesotho (RSL), but instead, non-performing entities will either be restructured or shut down, Minister of Finance and Development Planning, Dr Retšelisitsoe Matlanyane, has warned.
She issued the warning while appearing before Parliament’s Economic Cluster Committee earlier this week.
Speaking under oath, Dr Matlanyane told the Committee that Cabinet had resolved to conduct a comprehensive audit of all state-owned enterprises (SOEs) to determine which can be salvaged through restructuring and which should be closed altogether.
The minister was summoned and placed under oath following the committee’s previous unsuccessful attempts to engage her on several matters, including the adoption of regulatory reports.
Her appearance focused primarily on interventions, if any, to prevent RSL from confiscating assets belonging to indebted SOEs. In recent weeks, several parastatals have had properties attached by RSL in a bid to recover overdue tax arrears.
Committee Chairperson, Hakane Sello, told the meeting that RSL had informed them that numerous institutions had accumulated significant PAYE arrears and consequently had their assets seized.
He added that RSL had initially indicated having engaged the finance ministry on possible bailouts, and that the ministry had allegedly agreed.
“Most of these institutions have not been remitting PAYE for years, and the debt has grown beyond what they can afford,” Mr Sello said.
“We want to understand why these entities have not paid PAYE despite receiving annual budget allocations for salaries. People need to know how this non-compliance happened. As minister of finance, you have a responsibility to account.
“RSL reported having asked the ministry to bail out the indebted institutions, claiming the debt now amounts to millions of maloti. RSL said the ministry agreed to pay. So, we called you to hear if this is true.”
No bailouts for PAYE arrears
In response, Dr Matlanyane firmly denied that government had ever agreed to settle the institutions’ tax debts. She stressed that while the ministry may facilitate payment plans between SOEs and RSL, it will not repay the debts on behalf of any institution.
“There is no way the ministry can provide subvention for salaries, which includes PAYE, and then later bail out the same institutions for failing to remit it.
“All institutions must pay PAYE. While financial challenges are normal, they must still find ways to comply. RSL has its own procedures for recovering money, and the ministry will not interfere,” Dr Matlanyane said.
Asked to disclose the total PAYE owed by SOEs, Dr Matlanyane declined, stating she was not authorised to reveal taxpayer information.
She said many state-owned institutions were underperforming and failing to fulfil their mandates. As a result, Cabinet had resolved to carry out a comprehensive review to determine their future.
She also said audit reports should be scrutinised by Parliament to identify failing institutions.
“These reports will show wage bills, tax compliance, and any financial mismanagement, enabling informed decisions about their future,” she said.
“Institutions that no longer benefit the country or fail to comply with RSL should not continue to operate.
“The committee should summon the ministries responsible for these institutions, alongside the institutions’ management and boards of directors, to account for the failures.”
Economic Cluster member, Montoeli Masoetsa, expressed concern that RSL’s property seizures were damaging the country’s image. He urged the ministry to intervene at Cabinet level to ensure compliance without resorting to confiscations.
Chronic non-compliance
In September this year, former RSL Commissioner General, Advocate Mathabo Mokoko, told the Economic Cluster Committee that retirement funds of government employees were at risk due to widespread failure by government departments to remit PAYE.
She said many departments had consistently failed to meet their obligations, despite years of negotiations and warnings.
RSL was therefore forced to confiscate assets from defaulting institutions. Adv Mokoko stressed that seizures were never RSL’s first option and only occur after prolonged failed engagements.
“The PAYE in question is deducted monthly from civil servants’ salaries, but some institutions are not remitting it to RSL. We engage in prolonged negotiations, but where commitments are ignored, we are left with no choice but to seize assets. If they do not pay to reclaim the assets, they get auctioned,” Adv Mokoko had said.
Retirement funds at risk
“What concerns us most is that non-payment of PAYE will ultimately affect civil servants.
“These are people whose tax is deducted monthly but not submitted. If such an employee retires or dies, the PAYE will be deducted from their retirement package – or their dependents will suffer – all due to negligence by chief accounting officers.”
She said those whose properties have been seized still have a chance to reclaim them by settling their debts. Failure to do so results in court-sanctioned auctions.
Below are some of the institutions which owe RSL, with some already having their property seized due to non-compliance.
Paray Mission Hospital: M8.71 milion
Paray Mission Hospital owes RSL M8 710 000. Hospital Administrator Sister Clara Rakhomo previously told the Lesotho Times that the debt began accumulating in 2023.
“We informed RSL that we were struggling to pay this debt. It was either we pay RSL or buy drugs. If we paid RSL, we wouldn’t have been able to buy any drugs and medical supplies. We are working hard to pay this debt. We even made a payment plan, even though we do not know where we are going to get the money,” said Sr Rakhomo.
Maseru City Council: M62 million
Maseru City Council (MCC) reportedly owes about M8 million in PAYE arrears and M54 million in unpaid income tax and its associated penalties. Town Clerk, ’Moea Makhakhe, said the debt dates back to 2015 when MCC began defaulting on its revenue obligations. As a result, RSL confiscated 17 vehicles belonging to the Council in November this year.
“In May 2015, MCC started defaulting in remitting PAYE to RSL until May 2025. In May 2021, the government intervened and bailed MCC out with M37 million, reducing the debt to M15 million. However, in 2021, the debt started accumulating again,” Mr Makhakhe said.
Loti Brick: M7.4 million
RSL took Loti Brick to court over unpaid Corporate Income Tax, Fringe Benefit Tax, and PAY As You Earn (PAYE), amounting to M7,401,813.08.
The Magistrate’s Court subsequently ordered that Loti Brick’s property be auctioned to recover the outstanding amount. The targeted property includes its immovable assets located at Mankoaneng Ha Teko in Mazenod, Maseru.
The ruling reads: “This is also to authorise you to attach, remove and take into your custody or possession the immovable property of Loti Brick and of the same cause to be realised by public auction in the sum of M7,401,813.08, together with your costs of this execution, and pay to Revenue Services Lesotho the sum of M7,401,813.08, and return to this court what you have done by virtue hereof.”
Lesotho College of Education: M96 million
In September, RSL seized a vehicle belonging to the Lesotho College of Education (LCE) over an outstanding PAYE debt of M96 million.
Lesotho Housing: M35.7 million
During the same month, RSL obtained a court order to seize Lesotho Housing assets due to a tax debt exceeding M35,722,995. The amount continues to attract interest at 22% per annum. RSL has been authorised to attach movable property first, and if that proves insufficient, to proceed with attaching immovable property.
