VAT Increase In the Middle Of A Pandemic Shows Botswana Government's Disregard For The Poor
On 1 April, the government of Botswana officially put into effect a 2% increment of VAT (Value Added Tax), effectively increasing it from 12% to 14%. The VAT increase was just one of the numerous "fiscal balance restoration measures", as Minister of Finance Dr. Thapelo Matsheka referred to them in his 2021 Budget Speech , introduced by the government to try to tackle among other things, the P21 billion 2020/21 budget deficit, which is a whopping 11% of GDP, and to also to make up for the country's dwindling foreign exchange coffers which plummeted from P65 billion in 2019 to P58.7 billion at the end of 2020. Other "fiscal restoration measures" introduced on April 1st include fuel levy, withholding tax on company dividends, plastic levy, sugar tax as well as a levy on imported secondhand vehicles. VAT is nothing new in Botswana . Initially introduced at 10% in July 2002 to replace the then "sales tax", the first increment occurred in April 2010 by 2%
