LRA misses its target

LRA misses its target

MASERU-THE Lesotho Revenue Authority (LRA), missed its target of M7.5 billion by M591.8 million, according to a statement released on Monday.
The revenue authority remitted net collections of M6.9 billion for the 2019/20 fiscal year, which ended on March 31.

The statement said by gross amounts, the LRA collected M7.8 billion, representing M162 million (2.1 percent) growth from M7.7 billion collected in 2018/19 financial year.

The decline was attributed to the unpleasant challenges encountered during the 2019/20 tax revenue operating environment due to the decelerated global economic activity. “Lesotho was not an exception, and the impact was evident in many industries,” the statement reads.

“The economic meltdown is said to have been further exacerbated by the emergence of Covid-19, which is already resulting in devastating impact to productive capacity, affecting economic confidence, locking movement of both goods and people,” it reads.

The recorded net collections of M6.9 billion in 2019/20 financial year were largely offset by an increase in refunds pay-outs amounting to M902 million, from M718 million paid to clients in 2018/19 Financial Year, reflecting a growth of M184 million (26 percent).
Mining companies accounted for the largest share of refunds paid during the 2019/20 financial year.

The LRA said this sector recorded poor performance during the 2019/20 financial year due to the low demand from China amid US-China trade wars, and the overall fall in diamond prices as the trade faced macroeconomic uncertainty.

It said from the recorded deficit, alcohol and tobacco levy collections, amounting to M189.5 million, could not take off in October 2019 pending the introduction of the legal instrument that will enable the Authority to collect.

While Income Tax has historically accounted for an average 60 percent of the total tax revenue, largely explained by Personal Income Tax, however, in 2019/20 financial year, VAT at an estimated 51 percent reflects a shift in relative contribution.

“The shift is attributed to Corporate Income Tax collections and Withholding Tax collections being at their lowest due to the economic slowdown,” the statement read.

“Stagnant employment affected personal income tax collections and (PIT) and a policy consideration in relation to the tax credit was implemented in the second half of 2019/20 affecting PIT collections.”

Specifically, on the latter, acting as a relief to clients, the tax credit was increased and that led to a decline from an average 18.1 percent to 15.6 percent, suggesting low collections on taxable income.
Below is the breakdown of the overall performance.

Staff Reporter

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