June 18, 2008

Namibian President Announces Government Tax Cuts on Basic Foodstuffs

Text of report by Christof Maletsky entitled "Govt scraps tax on basics" published by Namibian newspaper The Namibian website on 18 June

Government is to scrap the 15 per cent Value Added Tax (VAT) on selected foodstuffs in the face of rapidly rising food prices.

President Hifikepunye Pohamba announced at a media briefing in Windhoek yesterday that VAT will be lifted on beans, cooking oil, fat, bread and cake flour.

However consumers will have to wait for an amendment to the VAT Act of 2000 to be passed by Parliament before they can benefit from this relief measure.

"I appeal to all our members of Parliament to ensure that the debate on the Amendment Bill is as short as possible so that the Bill can be passed speedily in order to address this difficult situation," a serious looking Pohamba said.

It was not clear yesterday when the amendment would be tabled but sources indicated it would be done as soon as the legislation was ready.

The National Assembly could have it by next week already.

The Cabinet decision to exempt these commodities from VAT comes after it was presented with a set of recommendations by a special committee assigned to help the poor survive the food crisis.

Pohamba said the decision to cut VAT on selected items was taken during a special Cabinet meeting on June 10.

Apart from scrapping VAT on those food items, Pohamba said, Cabinet had decided to expand the Namibian school feeding programme to cover non-boarding schools in rural areas and townships.

"The school feeding programme has several spin-offs including higher school attendance rates, improved learner concentration and educational outcomes, and better health for our children," Pohamba said.

Cabinet instructed the Ministry of Trade to encourage retailers to moderate their profit margins.

"In this regard I wish to point out that zero-rating on the items I have mentioned is intended to benefit our nation.

Therefore, it should be passed on to consumers and not be used as a means of undue profits," the President urged.

Cabinet has also decided to strengthen the Namibia Fish Consumption Promotion Trust to promote fish as a source of food but Pohamba did not provide much detail on it.

He said government would soon also develop strategies to increase food production as the crisis has forced some cereal-producing countries to ban exports.

A source said one way to do that was through finding investments to increase overall agricultural production in the country.

Although the special task force also considered scrapping value- added tax on other essentials like milk, sugar, mahangu and maize meal, President Pohamba did not mention them.

Escalating food and fuel prices have caused chaos in the lives of many working people around the world, who cannot cope with the continual price hikes.

There have been food riots in some countries.

Pohamba said about 862 million people worldwide were confronted by hunger.

In Namibia, he said, it had become clear that without Government intervention to offset high and rising food prices, people found it increasingly difficult to meet their basic survival needs.

When there was a similar rise in food prices in 2003, Government abolished VAT on mahangu and maize flour -the staple food for the majority of Namibians.

Elsewhere on the continent, countries like Tanzania also scrapped taxes on necessities and banned exports of staple foods like maize.

Last month, African finance ministers gathered in Maputo to map out strategies to tackle surging food prices, which are driving up inflation.

The Food and Agriculture Organization (FAO) has also called a African regional conference which will started in Nairobi, Kenya, on Monday to discuss ways of boosting agriculture and food security.

The United Nations has said that the world's food supply should increase by 50 per cent to meet the surging demand.

Originally published by The Namibian website, Windhoek, in English 18 Jun 08.

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